Invercargill Bucks National House Price Slump

While house prices fell across most of New Zealand over the past year, Invercargill went the other way — up 8.2 percent, outpacing Queenstown, Christchurch, and almost everywhere else.

The average Invercargill home now sits just shy of $550,000. Nationally, values dropped 1.2 percent over the same period.

Quotable Value Lower South Island regional manager Kylie Helman said the city's economy is doing the heavy lifting. "Invercargill's been one of the strongest performing markets in the country... the average value for Invercargill is now sitting just shy of $550,000," she said.

The driver, in her view, is straightforward. Record meat and dairy export revenue is flowing through the regional economy — to employees, contractors, tradespeople and local businesses. "Strong commodity prices have supported farm incomes and that money flows through the local economy to employees, contractors, trades and local businesses. And for some people that creates the ability to invest outside the farm as well and in some cases into residential property," Helman said.

First-home buyers are feeling it acutely. Local mortgage broker Mandy Jordan said she is seeing a generation of young tradespeople who would once have left Invercargill for work now staying put — and buying. Construction projects and employers like the Tiwai Point smelter are keeping them here.

"I have never seen first home buyers as active or in competition as they are today," Jordan said. "Our young people coming through that have got trades, there's no need for them to leave Invercargill — because we've got that much going on with infrastructure that there's employment for them. And they don't want to carry on renting. They want to get on the property market."

Recent buyer Taylor Whitehead noticed the shift at open homes. "It was interesting to see just how many people were attending these open homes and looking for houses... some of them I went to had like 20 or so people go through," she said.

Amy Murchland, who needed a house closer to her son's school, put her home on the market on a Tuesday. By Sunday, she had an offer. Speed was not the only surprise. "We knew it was going to be hot. What we didn't take into account was potentially how much the prices had risen from the last time that we were looking. So what we expected to be able to get for the money that we thought we were going to be able to spend was not reality. So we had to step out of our comfort zone a little bit in the finance situation to secure what we were looking for," Murchland said.

The numbers back that up. Real Estate Institute figures show Invercargill and Southland homes are selling in around a month — compared to 50 days nationally.

Harcourts Invercargill manager Wayne Ellis said low supply is compounding the demand. "There's certainly a shortage of stock available. Typically there's approximately 100 sales most months and currently, on the market, there's around 260, 270 properties available... really only two-and-a-half months of stock," he said.

And that pressure is unlikely to ease. Ellis flagged a wave of incoming projects — a wind farm, a large salmon farm, the country's largest data centre, and a critical minerals and hydrogen plant — that could bring thousands of new workers to the city. "There's going to be a need for 2000 to 3000 more workers and we need to be able to house those people. They're not all going to land straight away... but managing that growth will be the challenge," he said.

Helman said July showed some signs of cooling, but she is cautious about reading too much into it. "We did notice in July it has flattened off a little bit. It's too early to tell at this stage whether that's going to be an ongoing trend or whether that's seasonal demand coupled with an election year and interest rates on the cusp of moving. So, a crystal ball would be lovely."