Manawatu is famous for its effortless blend of city and rural living; from peaceful rural villages to bustling townships, or city life. It includes the charming towns of Feilding, Kimbolton, Āpiti, Himatangi Beach, Linton and Ashhurst. And at the centre of it all is the city of Palmerston North, a lively, multi-cultural heart.

It spans 2,624 square kilometres and encompasses beautiful parks, rivers and mountain ranges, including the famous Tararua and Ruahine ranges, and sweeps out to the rugged west coast beaches of Himatangi and Tangimoana.

More than 120,000 people choose to call Manawatū home – a name that means heart standing still.

Those that live there are less than two hours from Wellington and one hour from Whanganui by car. It’s also an easy drive to North Island ski fields, Hawke’s Bay wineries and Mount Taranaki.

An aerial view of Palmerston North.

At the region’s centre is Palmerston North city, home to more than 70 educational and research institutes, including Massey University and UCOL.

Key industries are agrifood, farming, health and education, distribution and logistics, as well as science.

FoodHQ is based in Palmerston North. It’s a collaboration of internationally recognised companies, research and educational institutions providing food companies and innovators access to one of the world’s leading clusters of food science expertise and facilities.

The Fonterra Research and Development Centre, one of the largest dairy research facilities in the world, is also there and has more than 300 researchers, engineers and scientists from 46 countries, including 130 PhDs.

Palmerston North has the highest concentration of scientists, researchers and innovators in Australasia, with 3,900 working in the sector.

Supporting businesses are four state highways, rail links and regular flights from the airport around the country.

Innovations the region makes to achieve a greener, cleaner planet make residents the most proud. Scientific and technological capabilities in agrifood and tech innovation are the region’s point of difference, and the reason global companies turn to it to find solutions to their sustainability problems.

CLOCKWISE FROM TOP LEFT Nga Huruhuru Rangatira sculpture in The Square, Palmerston North; Himatangi Beach is great for fishing; Splashpad, Memorial Park is a kid’s wonderland; Te Apiti Wind Farm is a green energy innovation; Feilding saleyards on a busy day; take a walk through the Limestone Creek Reserve Glow Worm Caves.

The Big Pull

That sustainability has attracted many people to Palmerston North and its cheaper housing has been a big pull, although it’s one of the most difficult times in the market, says Andy Stewart, The Professionals salesman and REINZ ambassador and board member.

“It’s absolutely a buyers’ market. In my 36 years in the industry it’s the most prominent definition of the market right now.

“There are far more listings available and far fewer buyers in a position to transact. Vendors want to sell, and buyers want to purchase, but the limitations arising from high interest rates, job retention, confidence in the economy and finance approval has knocked the market around so much it’s one of the most difficult times ever,” Stewart says.

This has shown up in the latest CoreLogic data. House prices in Palmerston North have risen 3.8 per cent in Cloverlea from $533,400 to $553,900, Fitzherbert 3.3 per cent $887,750 to $917,350, 2.7 per cent in Palmerston North City from $601,700 to $617,750, while in Feilding prices have increased 3 per cent from $606,150 to $624,300.

At the other end of the scale there have been declines of three per cent in Sanson to $513,600 from $529,300, 3.2 per cent in Halcombe to $674,900 from $697,050 and 0.4 per cent in Rongotea to $588,750 from $591,300.

Manawatu is lucky, Stewart says, in that it is reasonably affordable compared to major cities and it’s fortunate to be in a position where it is possible for many to buy a property.

However, the biggest problems are job insecurity and what people perceive as high interest rates, which are nowhere near the highest ever seen. When Stewart bought his first house interest rates were 21 per cent.

“What has hurt homeowners in this recent round is the interest rates going from 2 or 3 per cent to 6 and 7 plus per cent.” He doesn’t believe interest rates will ever drop as low again and there won’t be relief until at least early next year.

Trading Up

Most of Manawatu’s buyers are owner-occupiers trading up or downsizing. Investors are nowhere to be seen and first-home buyers have been restricted by bank lending. Bank finance approval is taking 10-15 days, whereas at the height of the market it was taking five days, Stewart says.

With the relaxation of the bright-line test to two years, he is expecting a few investors to sell, but not a flood. “There are some investors saying, ‘I’m getting out of it’, but there are others that will just manage through. Property is still an investment. It’s always going to be. If you can manage it and do it right, it’s going to be the major source of income down the track for retirement and other things.”

His issue with investors selling is there won’t be enough rentals, the availability of rentals will be difficult, rents will rise, and people will struggle to put a roof over their heads.

“Anything the government can do, such as the recently announced moves to ditch rural urban boundaries, the minimum size of apartments and balconies and making councils supply enough residential zoned land for 30 years’ housing, is going to encourage people to build. We are not going to get anywhere as a country unless politicians carry through things to free up housing policies and make it easier for developers.”

Pukeko Rental Managers, run by Paul and Kaylene McKenzie, are also finding the rental market tough.

“Flat” is how Paul McKenzie describes it. “With the economy the way it is, people are a lot more cautious. They don’t want to move to a bigger house to find that they can’t afford it all of a sudden if they lose their job. So, people are staying put just gauging by the inquiry levels. The feeling I get is they’re just holding off.

“Finding good tenants is also a lot harder than it normally is.”

CLOCKWISE FROM TOP LEFT Manawatu is New Zealand’s agricultural capital and Fonterra is a big employer, logistics centres offer steady jobs, Biolumco is an agrifood business located here, farming is a lucrative sector.

Prices Tweaked

Some of that is the winter doldrums, with people not wanting to move. McKenzie has had to tweak prices on a couple of rentals he has been advertising for the past three to four weeks just to capture interest. Six months ago, the same properties would have had “untold” applications, but McKenzie says now he might be lucky to get a handful of applicants of any decent quality.

There are plenty of rentals across the region. Trade Me has a couple of hundred and that is too many, he says.

“Renters have choices and can pick and choose which one suits them. It becomes a fight for property managers to attract the best tenants.”

Some of the properties for rent are from accidental landlords – owners who have put their property on the market, can’t get the price they want and end up putting it in the rental pool.

“I’ve had a few referrals from real estate agents on houses that have sat on the market for some time because the owners are ambitious with what they’re trying to get in this market. Most bought at the peak of the market two to three years ago, they’ve decided to sell and don’t even get anywhere near the sort of money they paid for the property, so they’re deciding to rent out for a year or two and see what happens from there.”

Others are moving out of the region for work and renting their properties. “It’s the other end of the spectrum – a move to greener pastures and renting their property until they figure out the lie of the land.”

For a three-bedroom house, renters are paying on average $600-$650 a week, depending on its quality and size, unless they’re small places, which are a bit less.

Manawatu has a healthy population turnover. McKenzie says there are always people arriving in the region for work, mainly at the bigger employers such as Fonterra, Massey University and logistics companies. At the same time there are always people moving out of town. The past four rentals Pukeko Rental Managers have handled have gone to out-of-town renters.

McKenzie doesn’t see the market changing until spring/summer. “A lot of fixed-term tenancies come up then and people think of moving. I think there will be more transition then and renters wanting to move.”