House values in Nelson's most "affordable" suburbs are increasing faster than anywhere else in the region, new figures show.
The central Nelson suburb of Toi Toi has seen the greatest rise in house values over the past year, followed by Tahunanui and Nelson South.
The rise of Nelson's most affordable suburbs has occurred during a "perfect storm" of strong competition for entry-level houses and low numbers of listings, driving up prices to record highs.
But community organisation, Voice Nelson, says the region's property market is impacting on rents and driving more people to homelessness.
In the year to January, property values increased by 20 per cent in Toi Toi, 17.9 per cent in Tahunanui, 17.6 per cent in Nelson South, and 17 per cent in Washington Valley, according to data from QV.
Despite the significant increases, the suburbs remain the region's most affordable.
In January, the median property value was $347,900 in Toi Toi, $388,500 in Washington Valley, $431,200 in Tahunanui, and $466,950 in Nelson South.
In Toi Toi, house values increased by 20 per cent in 2016. In Toi Toi, house values increased by 20 per cent in 2016.
In comparison, the median property value in central Nelson was $664,500 (up 15.7 per cent), $588,900 in Atawhai (up 13.7 per cent), and $501,500 in The Wood (up 16.3 per cent).
The latest average property value in Nelson was $513,933, according to QV.
QV Nelson registered valuer Craig Russell said Toi Toi, Tahunanui, Nelson South and Washington Valley had a high number of properties in the $300,000-$450,000 price bracket, which had been "the most competitive" area of the market over the past 12-18 months.
As first-home buyers, owner-occupiers and investors competed for these properties at the "affordable" end of the market, they were pushing prices up, he said.
"Median values in these locations have shown the greatest percentage increases given they are considered more affordable."
However, an average house in Nelson's most affordable suburbs cost more than four times the median household income — far from affordable according to international standards.
'Perceptions have changed'
Ray White salesperson Alex Geraghty said when he moved from Auckland to Nelson two years ago, he saw Toi Toi and Nelson South "for what it is and what it will be".
He said it had similarities to Ponsonby in Auckland. It was close to town, schools, kindergartens, the hospital and home to a vibrant community.
"I was saying it's such an untapped area and I saw great growth there, and that's been backed up with the figures."
He said the suburbs where property prices have increased fastest have historically suffered from public misconceptions.
"Toi Toi was an area that people didn't want to move to. I think that perception of the area has completely changed," he said.
"It's more attainable than other areas. I think there's been such a transition in Nelson South. It's not for people thinking that's all I can afford, but actually what I get in terms value is a lot more than in other places."
For first-home buyers, who followed the rule of "buy where you can", affordable suburbs were a logical choice, he said.
"It takes one or two buyers to come in and start sprucing up and doing that kerb appeal and it does change the street."
The new 'affordable'
Voice Nelson housing spokeswoman Mary Ellen O'Connor said the gentrification of the city's most affordable areas has put pressure on renters.
"It's awful when the affordable suburbs start to move up in price," she said.
"By the time what was affordable becomes unaffordable, that's when you're looking at real homelessness."
O'Connor said more Nelson people were living in campgrounds, garages and sharing houses with other families as a result of rising property values.
As values went up, landlords and property managers were inclined to increase rent.
O'Connor said people more people were reaching the end of tenancy agreements and finding that they couldn't afford the higher rates.
"I guess it's just reflecting the national picture. You're getting extraordinary divide."
Nelson-Tasman property values by suburb
Suburb, Median value (January, 2017), Price change in year to January