Aerial view of Mount Maunganui. Photo / File
House prices are rising faster than it's taking first home buyers to save for a deposit - but there are still bargains to be had in Tauranga.
A home on Maunganui Rd in Mount Maunganui sold for $500,000 last month.
Fifteen homes sold in the Mount for under the $550,000 First Home Grant cap for new properties in the last three months.
Nine sales under $550,000 also sold in Gate Pā, nine in Welcome Bay, eight in Ōtūmoetai, seven each in Greerton and Hairini - and six each in Bellevue and Parkvale.
The latest Real Estate Institute of New Zealand data shows Tauranga's median house prices have skyrocketed 59 per cent in the last five years to $825,000 from $520,000.
REINZ chief executive Bindi Norwell said in the last few years median house prices across the country have risen significantly, making it more difficult for first-time buyers.
"Prices are increasing at a quicker pace than their deposit, meaning it's taking longer to save for a property and also that young people are having to take on greater debt than they might have five or 10 years ago."
However, Norwell said that didn't mean it was impossible for first-time buyers to be able to purchase their own home.
"One really important thing for first home buyers to remember when house hunting is that this isn't going to be your 'forever home' – it's a stepping stone."
Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson said prices may have gone up since he first bought in the early 1990s.
But, he said, it was no less unaffordable today due to the rock-bottom interest rates.
"The challenge is getting the deposit and being creative when getting it together."
Anderson's advice for first home buyers was to keep their options open.
"Be willing to compromise," he said. "Think about expectations on location ... you may have to look at other areas that are more traditional first home buyer areas that are more established areas without specific location features such as water or views."
Tauranga Harcourts managing director Simon Martin said at the end of the day it all came down to compromise.
"You set out with a perfect plan as to what you want but at some point, you have to compromise."
Martin said there had been an increase in first home buyers entering the property market in the last few months.
"That's partly due to the interest rates being so low," he said.
"A lot of first home buyers were entering the market a lot earlier after saving money in the lockdown. Some first home buyers may have been planning an Overseas Experience but can no longer go so are buying a house."
But Martin said a lot of first home buyers did not have their "ducks in a row" and had not engaged a solicitor, or knew what to ask regarding LIM and building reports.
"If they've got this sorted they will have a much better chance of securing a property."
General manager of Tremains Bay of Plenty and Waikato Anton Jones said most of the more affordable homes in the Mount were likely to be unit title developments.
"There are pockets in the Mount that are more cost-effective," he said.
"I know there are some high-density developments in Miro St and Owens Place. Those often are a little bit cheaper and good options for people, certainly first home buyers, to get on to the property market."
Jones said first home buyers were competing against investors as well, which made it harder for them to enter the market.
But he said first home buyers had still been "very prominent" in the last three months.
"The interest rates are so low it's better value for money to buy rather than rent."
Jones encouraged first home buyers to get comfortable with auctions.
"I know they can be quite scary places to be. It's hard for first home buyers ... but if you're not comfortable with auctions, unfortunately, most properties are going at auction.
"But know your limits and know the market."
OneRoof's data partner Valocity showed the lowest sales in the last three months included a home on Ngatai Rd in Bellevue which sold for $250,000. It was a non-market sale and not advertised publicly.
Valocity's director of valuation James Wilson said like many parts of the country, first home buyers were facing "extremely hot" market conditions in Tauranga and Rotorua.
"These conditions are being fuelled by both historically low-interest rates and a shortage of listings coming to market, meaning that competition for the stock that does reach the market is intense."
Wilson said first home buyers should make sure they adopt a longer-term mindset.
"Property ownership is a long game. Ask themselves: 'Will this property suit us for the next five years, suit our future plans?'," he said.
"Don't panic, don't get caught up in the hype. Take the time to do your research, speak to local experts and ensure that you understand the property and area you're looking to buy, how much it changes over the next few years."
Trade Me Property's Alan Clark said the cheapest property listed for sale in Tauranga in November was a one-bedroom apartment on Durham St with an asking price of $360,000.
"It isn't easy for first home buyers to get a foot on the property ladder in the Bay of Plenty.
"Prices have increased significantly over the last few years and this is not showing any signs of slowing down."
Auckland, Queenstown Lakes District
Existing/older properties: $600,000
New properties: $650,000
Hamilton City, Tauranga City, Western Bay of Plenty District, Kāpiti Coast District, Porirua City, Upper Hutt City, Hutt City, Wellington City, Tasman District, Nelson City, Waimakariri District, Christchurch City, Selwyn District
Existing/older properties: $500,000
New properties: $550,000
Rest of New Zealand
Existing/older properties: $400,000
New properties: $500,000
Source: kaingaora.govt.nz
1. Do your homework
- Read the local property pages
- Look online at digital platforms such as realestate.co.nz
- Visit lots of open homes
- Talk to your bank or your financial adviser about what you might be able to afford
- Make sure your finances are in great shape by paying off any debt that you can eg. student loans, credit cards or any hire purchases
- Talk to a local real estate agent about potential properties that might be coming on to the market in your desired area and to get a sense of the prices of different types of properties
- Stick to budget
- Look at up-and-coming areas and consider buying a little further out or at property where you can add value and maximise future capital gains
- Don't sign anything until you've spoken to a lawyer
"Before, you had no limitations ... and all of a sudden there’s a handbrake on."