CoreLogic says Tauranga's quarterly growth rate rose an "extraordinary" 10.2 per cent. Photo / Getty Images
CoreLogic says Tauranga's quarterly growth rate rose an "extraordinary" 10.2 per cent. Photo / Getty Images
Home values in Tauranga jumped a whopping $76,000 in the last three months of 2020, recording the highest value growth since about 17 years ago.
The city's average property value was now $876,122.
CoreLogic NZ's latest House Price Index showed Tauranga's quarterly growth rate rose an "extraordinary" 10.2 per centfrom $800,000 the previous quarter.
The last time property values in the city exceeded double-digit growth was in May 2004 when values climbed 10.5 per cent to just above $350,000.
CoreLogic NZ head of research Nick Goodall said the growth reflected the persistent demand for the area.
Multiple property owners and movers - mainly locals upsizing their property - were key market participants in Tauranga, he said.
CoreLogic NZ head of research Nick Goodall. Photo / Supplied
The CoreLogic Buyer Classification series revealed multiple property owners using a mortgage have been increasing their share of sales in the harbourside city to 24 per cent in the final quarter. That compared to 23 per cent in the fourth quarter of 2019.
However, owner/occupiers moving house remained a core market participant, accounting for 32 per cent of sales so far in Q4, many of which were locals upsizing.
General manager of Tremains Bay of Plenty and Waikato, Anton Jones said a city with an average property value upwards of $870,000 was "scary" for people wanting to get into the market.
"Affordability seems to be disappearing."
Jones said it was not surprising the city's average property values had climbed that high but it was concerning for many people. But, he said, as long as interest rates remained low it might not be all bad.
Managing director of the Realty Group Ltd, which owns Bayleys and Eves, Simon Anderson said the city's value growth was not surprising and proved it was an "exceptional" end to the year.
"We saw really strong growth in August onwards and it has continued to December."
Managing director of the Realty Group Ltd, which owns Eves and Bayleys, Simon Anderson. Photo / Andrew Warner
Anderson said well-located properties in areas including Mount Maunganui, Matua and Pyes Pā showed strong growth in the last quarter of 2020.
The only concern, he said, was the rate of which home values were growing.
"Any market wants growth but we want it to be managed growth not out of control growth. Based on the numbers that we're seeing, that's not an indication of managed growth."
The big jump in value growth was reflected in the demand for property, the number of buyers looking to transact combined with the availability of cheaper loans.
For first home buyers, the availability of cheaper money was compensating for rising home values, he said.
First National Real Estate Tauranga general manager Cameron Hooper said no one expected property values to climb this high so fast.
"It's become the new norm."
But Hooper said the market was strangled by a shortage of stock.
First National Real Estate Tauranga general manager Cameron Hooper. Photo / Supplied
"People are repurchasing in the same market and the shortage of stock is putting more and more pressure on. People are willing to pay more money for property.
"It's a massive sellers' market at the moment."
Things weren't likely to change until there was a flood of listings, he said.
He had noticed homeowners were looking for specific areas to buy into.
"A lot of the more popular areas were receiving a lot more interest."
When he started selling real estate in the mid-2000s, Hooper said a three-bedroom, two-bathroom home was between $200,000 and $250,000.
"But we're a big city now... whether we like it or not it's just going to keep growing."
OneRoof editor Owen Vaughan. Photo / File
OneRoof editor Owen Vaughan said there was a "big surge" in Tauranga's property market during the closing months of 2020.
"We're all seeing super-low interest rates are really fuelling the market and accelerated decision making around buying property leading to more competition."
But Vaughan said there was not enough property in the market to fuel the demand.
"To begin with, it was first home buyers fuelling the lifts in value but we're now seeing a lot more money coming from investors and movers."
That was only going to continue, he said.
"I think we're going to see a busier end of January and start to February than the market would've normally seen."
