Aerial view of Rotorua. 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 Rotorua.
A home on Pōhutukawa Dr in Ōwhata sold for $327,500 last month.
Six others in Western Heights sold for under the $400,000 First Home Grant cap for existing or older properties in the past three months.
Five sales under $400,000 also sold in Victoria, four in Koutu and three each in Mangakakahi, Ōwhata and Rotorua Central.
The latest Real Estate Institute of New Zealand data shows Rotorua's median house prices have skyrocketed 116 per cent in the past five years to $541,000 from $250,000.
Reinz chief executive Bindi Norwell said in the past few years median house prices across the country had 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 might have gone up since he first bought in the early 1990s, but it was no less unaffordable today because of 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."
Anderson said Rotorua was a more established investor market.
"When they sell, they become potentially first-home buyer homes. But there are always investors in the market so it's not a free-for-all for first-home buyers."
First National principal and Rotorua REINZ spokeswoman Ann Crossley said she was seeing first-home buyers "over and over again" as they competed in multi-offer scenarios.
"I don't think I've met a first-home buyer lately that has got the first property they've put an offer on," she said. "They've all missed out on something by the time they actually buy."
Crossley said first-home buyers were struggling with the conditions they put in.
"All first-home buyers should do their due diligence," she said. "But there are ways of still doing due diligence but in a better position. It's not always about the money, it's often about the conditions."
She advised "lining up all your experts" before entering the market.
She said it was also hard for first-home buyers to compete against savvy investors. "But they just have to ride the wave."
"There's only a small number of properties and a large number of first-home buyers. Any new property that comes on it's a bit like a feeding frenzy."
Tremains sales manager Megan Davies said she could only find a handful of homes in Glenholme sold in the past three months for less than the housing cap.
"One of those was a 100 square metre home on a cross lease, the others were largely in the area of Glenholme previously designated public housing, which is actually a great option for new home buyers as some of these areas are becoming 'gentrified' as investors move out of area.
"Western Heights has, for over a year now, been seen as excellent value and will continue to rise, forcing first-home buyers back to other areas."
Davies said her discussions with first-home buyers reflected a massive frustration.
"They are missing out because they are capped on their price, have to be conditional and have to enter multi-offer scenarios."
She said a lot of vendors did want to sell to first-home buyers.
"We have had many sales where the vendors took a lower offer to give a new owner a chance. Don't give up. Wait it out – the market always changes."
Harcourts Rotorua sales manager Colville Barbour said Ōwhata and Western Heights had traditionally been first-home buyers' territory.
"With the increase in demand from the investor pool over the years, it has become more difficult for first-home buyers to purchase in these suburbs.
"They face the challenge of bank-imposed limits and the need for sizable deposits.
"With increasing prices, these challenges only become exasperated, particularly in recent times."
Barbour said the current stock shortage meant relief might be some way off, although a potential tightening of LVRs for investors could offer some relief.
He said the biggest struggle was saving the necessary deposit.
"A good idea is for first-home buyers to work closely with a mortgage broker who can help explore all financial options, including tapping into KiwiSaver.
"Although it can be difficult, don't lose sight of your goal as it is a worthwhile achievement that can have a huge impact. Compared to a lot of other centres, Rotorua offers better affordability."
OneRoof's data partner Valocity showed the lowest sales in the past three months included a home on Ngatai Rd in Bellevue that sold for $250,000, another in Mansels Rd in Parkvale that sold for $500,000 and a Mount apartment that sold for $550,000.
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 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 Rotorua in November was a 1970s two-bedroom unit in Reporoa with an asking price of $280,000.
"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."
FIRST HOME GRANT - HOUSE PRICE CAPS
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
REINZ: FIRST-HOME BUYER TIPS
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.
Restrictions have been placed on all outdoor fires in parts of Hawke's Bay.