The real reason house prices are up in the regions

Recently I travelled back to Napier – which also happens to be my home town – to watch Elton John perform one of two concerts at the Mission Estate. It’s a concert venue I’ve returned to often over the past 25 years and one with which I have a particularly special link.

Back in the early 90s, I was responsible for city promotion on Napier City Council and I was approached by the International Management Group (IMG), along with then Mayor Alan Dick, about an idea they had to host annual concerts at the Mission. They wanted to create a world-class outdoor event and planned to feature Dame Kiri Te Kanawa as their first artist – but they needed council help to get it over the line. Seeing the potential, Alan and I were able to convince the rest of the council that this was a project worth supporting, and the rest is history. Twenty-five years on the Mission has hosted some of the world's greatest artists and continues to be one of New Zealand’s most iconic outdoor concert venues.

Of course, that wasn’t all that Napier had going for it and, over that same 25 years, the city has leveraged it’s unique Art Deco architecture, well-planned city-scape, stable workforce and the surrounding regional economy and wine culture to become a tourism hub and an extraordinarily attractive place in which to live.

But Napier wasn’t alone in that transition. Nelson, New Plymouth, Invercargill, Tauranga, Palmerston North, Timaru and Hamilton are all cities that have transformed themselves into desirable places to live over the past couple of decades - with vibrant cultural, entertainment and arts scenes and competing claims to fame as measured by the ability to make that most esteemed of kiwi icons – the cup of coffee.

At least four of these cities – Napier, New Plymouth, Nelson and Invercargill – all also suffered from the tyranny of distance from a metropolitan centre, yet this has made little difference to their ability to position themselves. Few things say more about confidence in a location than rising house prices – and all four of these have seen strong house price growth over the past 20 years. Houses in Napier typically sold for $140,000 in 1999; the median sale price is now $520,000. The median sale price for Nelson in 1999 was $155,000; it's now $552,500, while New Plymouth and Invercargill house prices have jumped from $113,527 and $65,000 to $440,000 and $285,000 respectively over the same period.

So what changed? How did these regional centres manage to turn their once tired towns, often struggling economies, and quaint provincial amenities into the vibrant destinations they are today?

Some of it has been due to good local leadership, a little is due to the appeal of lower living costs outside the metro centres – and of course, some of it is due to the lifestyle advantages and natural features in these towns.

But by far, and away, the two main causes of growth in these cities are the rise of the internet and the gradual improvement in regional transport links.

The road between Napier and Taupo, which links the city to State Highway One, is a good example of this. When I was a kid this was a 3.5 hour trip. It’s now an hour and a half due to better cars and substantially better roads – and there’s a version of that story in every part of the country. Air links have also improved dramatically – although the recent Jetstar decision to pull out of some of these cities will be a setback to that growth – particularly if Air New Zealand chooses to return to its previous practice of gouging regional travellers.

But the number one contributor to the massive growth in the regions, since the mid 90s, is the internet. Businesses and professionals who once had to be located in a metropolitan centre can now operate just as successfully in a regional centre with the speed of data, the availability of skilled staff and the ease of digital communication meaning that the once significant obstacles of distance have now all but evaporated.

This will inevitably lead to a swing back in favour of the regions over the next twenty years and means that the former National Governments focus on national roading and infrastructure (which the Coalition has belatedly copied after killing it off for two years) was absolutely essential – and that Councils will also need to step up and plan for long term, sustainable, population growth to accommodate this growing social and demographic change.

- Ashley Church is the former CEO of the Property Institute of New Zealand and is now a property commentator for OneRoof.co.nz. Email him at ashley@nzemail.com