Average house values in Tauranga City in August were up 28.5 per cent year on year to $633,638. Western Bay of Plenty homes also showed strong growth of 26.3 per cent to $557,640, according to the latest QV House Price Index.
Over the past three months, the average home value in Tauranga City rose 7 per cent, and the average value for Western Bay homes rose 6.2 per cent.
However, perhaps the most telling statistic is that average house prices in Auckland have now topped the million-dollar mark at $1,013,632.
“I think we will continue to see the effect of the Auckland market down here,” said Realty Services chief executive Ross Stanway.
“Auckland is likely to continue to be unaffordable for a lot of people there. It’s pretty difficult for first-time buyers, if not impossible.”
Mr Stanway said business confidence remained high. Another factor coming into play was a tendency for extended families to relocate.
“Retirees are not just coming for the lifestyle, they’re coming here because they have younger members of their family here with children or grandchildren.”
Priority One’s Annie Hill said the sub-region was undoubtedly becoming a more popular place to both live and work.
“We are seeing strong job growth, which has gone along with the increase in housing demand,” she said. “It’s great to see us being such a desirable place for people to live, work and establish a business. Obviously the difficulties come in when housing becomes unaffordable. We’re seeing this in Auckland and it’s a good thing that people want to move here. But it will be concerning if prices get so high that people can’t afford to live here.”
QV Tauranga registered valuer David Hume said there had been indications from brokers, lenders and real estate agents that the new loan to value (LVR) restriction requiring 40 per cent equity for investors was starting to have a cooling effect on the Tauranga and Western Bay markets. But whether it was a blip on the radar remained to be seen.
“Investors now need twice the equity they did five weeks ago and it appears they are taking a wait-and-see approach as they come to terms with the new restrictions.”
However, there were still a number of first-home buyers and pre-approved purchasers in the market, driving demand, he said.
“It’s too early to tell what effect the new LVR restrictions will have on the market in the medium term and on values, but it’s unlikely the BOP will see similar levels of growth in the coming year to that witnessed over the last 12 months.”
ASB economist Kim Mundy estimated that, nationally, investors made up about 37 to 38 per cent of house sales, and the most recent data suggested only a slight dip.
“Each time we’ve seen these LVR restrictions come into play, it has caused a slowing in the market, but it’s been temporary.”
That was partly because interest rates were so low but it also came down to the supply, she said. “Inventory levels have been picking up a little, but that just takes them off record lows.”