Aerial photograph of Tauranga. Photo / Mead Norton
Aerial photograph of Tauranga. Photo / Mead Norton
The average property value in Tauranga has dropped nearly $129,000 since its market peak in April last year, new data shows, with house prices expected to fall further in 2023.
Tauranga salespeople say houses were no longer selling for “crazy money”, and it was a good time for first-home buyers,as long as they could afford it.
OneRoof’s January 2023 report showed the city’s average property value in December was $1,121,100, a 10.3 per cent drop since its highest in April 2022 at $1,250,000.
In the wider Bay of Plenty, the average property value had dropped more than 9 per cent - or $97,600 - to $991,400 since its peak of $1,089,000 in April 2022.
Senior research analyst at OneRoof’s data partner Valocity, Wayne Shum.
Senior research analyst at OneRoof’s data partner Valocity, Wayne Shum, said all suburbs in Tauranga had fallen below their values from a year ago.
The biggest drops were in Bellevue and Judea, which both fell more than 12 per cent. But suburbs such as Ōtumoetai and Tauranga South fared better and saw smaller declines at 6 and 7 per cent.
Shum said the rising mortgage rate had deterred buyers from entering the market, particularly among investors who were facing higher holding costs against stagnant rental growth.
“Investors have been active in the region during the boom period.”
Potential buyers were taking their time instead of having fears of missing out like what was seen in 2020 and 2021, as many expected prices to fall further throughout 2023, he said.
“Debt serviceability will continue to plague buyers; the RBNZ will likely lift the OCR again if inflation remains high.”
In the Western Bay of Plenty, the suburb with the highest value was Te Puna, which climbed $60,000 to $2,005,000; $48,000 more than a year ago, and $504,000 more than two years ago. Minden recorded the biggest fall in value in the last year, dropping $116,000 to $1,664,000.
Tauriko was the most expensive suburb, with a current property value of $1.95 million. The cheapest was Gate Pā, at $696,000.
Greg Purcell of Ray White Mount Maunganui.
Greg Purcell, of Ray White Mount Maunganui, said the falling house prices could make it feel like the property market was “crashing”, but it was not.
“It is just a correction that had to happen,” he said. “Values are still good. People are still getting money for their houses, it is just not crazy money.”
Their team had five new loan inquiries at the start of this week, he said.
“Buyers are out there. They have got more choices and they know it. They are not panic buying.”
Purcell said buyers knew what they were willing to pay and were sticking to it.
“There is a lot of that happening.”
First-home buyers knew prices were not in a free-fall, although some might hope so, he said.
“This is my 30th year in real estate, and no-one has ever said to me they wished they hadn’t bought when they did. Now is usually the best time to buy.”
Tremains Bay of Plenty managing director Anton Jones. Photo / George Novak
Tremains Bay of Plenty managing director Anton Jones said he believed the peak was during the October to November period last year.
“We were getting some good sales in those months at very high values, and it has been steadily dropping from there. I am surprised it is only 10 per cent, I thought it would have been more like 20 per cent,” he said. “A lot of areas have really felt the hit.”
Jones said falling values would be good long-term, allowing first-home buyers a chance to get into the market at a lower price. But, he said, with rising interest rates, buyers had to be able to service the debt.
“It is the best time to buy, provided they can service the debt.”
The number of properties for sale was lifting, but not in “huge numbers”, he said.
“We thought there would be a massive influx, but it hasn’t happened.”
In nearby Rotorua, average property values dropped nearly $74,000 - or 9.2 per cent - to $730,600 since the April peak of $804,400.
First National principal and Rotorua REINZ spokeswoman Ann Crossley said it had been well and truly heralded in the media that property prices were falling.
“Buyers are expecting to pay less.”
Crossley said falling values were “good news” for first-home buyers. However, they still had to be able to afford it.
“Although there is more to choose from and less urgency to act, the finance side of things is going to be tougher.”
Lynmore’s rising property values were likely due to the number of new property sales in the area, while Hamurana featured lifestyle homes, she said.
Crossley said the number of properties for sale was slowly rising, but sellers did need to expect to be on the market for longer.
