Rotorua's current average property value was $755,000. Photo / Getty Images
Only 18 per cent of Rotorua's total housing stock is now valued under $500,000, new data shows.
The latest OneRoof and Valocity property report shows a dramatic decline in the number of homes valued under half a million dollars.
In 2014, 90 per cent of homes had a value of $500,000 or less but that fell to 80 per cent in 2016.
The percentage of homes under $500,000 tumbled to 53 per cent in 2019 and 40 per cent in 2020. Now, the number is just 18 per cent.
The city's current average property value is $755,000 - a whopping $144,000 more than a year ago.
OneRoof editor Owen Vaughan said the data was a "powerful" illustration of how much the property market had shifted in Rotorua.
"What we can see is a rapid decline in the $500,000-and-below price bracket."
Vaughan said property values under $500,000 had "crunched or all but disappeared" in the Bay of Plenty.
Senior research analyst at OneRoof's data partner Valocity, Wayne Shum, said first-home buyers seeking to enter the market in that price bracket now had fewer options available.
They were now in direct competition with investors and other first-home buyers, he said.
Shum said the drop in the number of sub-$500,000 properties slowed until 2020 and 2021.
The suspension of the LVR and record-low interest rates enabled existing homeowners to unlock equity and buy investment properties after the 2020 Covid lockdown, he said.
"Rotorua was a popular location in this boom due to its high rental yield and low cost of entry."
Managing director of the Realty Group Limited, which operates Eves and Bayleys, Simon Anderson, said Rotorua had traditionally been a city where people had the ability to hop on the property ladder.
"As we have seen in the last two years, the market at 20 per cent growth is pretty disheartening to a young person who is trying and hasn't got on [the property ladder] yet."
Anderson said he was still seeing strong first-home buyer interest but it was becoming harder.
"First-home buyers have got to come up with different ways to get on the market as the market accelerates away from them."
That included joining with friends, flatmates, or leaning on Mum and Dad to get on to the property ladder and sacrificing dream locations for something more affordable.
"We know that every Kiwi wants to own their own home ...
"There are those who are desperately looking and there are some who have tried four or five times, and those who are thinking about it and decided it's too hard.
"That is the norm now."
Anderson said Bayleys hosted seminars to help get people on the property ladder, where buyers heard tips from mortgage brokers and lawyers.
"They are proving popular."
There were tears of joy and celebration when a first-home buyer was successful at auction, he said.
"But it is also heartbreaking when you see a young person outbid."
Rotorua Professionals McDowell Real Estate co-owner Steve Lovegrove said it was inevitable the under $500,000 market was going to start slipping away.
"At the moment I can't see any line of sight that it will soften in the regions."
Lovegrove said the more people continued to move out of the bigger cities like Auckland into the regions the more prices will go up.
"That is going to be the consequences of the future."
Housing Minister Megan Woods said there was policy work going on into the issue of first-home products like the First Home Grants and indexing them to house prices.
"[But] a careful balance needs to be struck so the products themselves don't become a source of inflation to house prices."
"You never know how much of a luxury it is to hang photos on your own walls."
That's how one first home buyer feels after reaching her goal of getting onto Rotorua's property ladder.
Aneta, who only wanted her first name used, paid $420,000 for her two-bedroom home in Fairy Springs.
Aneta started her search for a first home last year.
At the time, she was renting with her husband Dylan and teenage son Haare.
"We had a bit of debt but we had okay salaries."
A very honest and "straight-up" mortgage broker said her dream of owning a home won't start until she paid off any debt.
So, she consolidated her debt and started seriously paying it off.
In February, she started looking at three-bedroom homes in her $400,000 price range.
But every time she put an offer on a home she would miss out.
"At one point, we literally missed out on one by about $1 or $10."
Aneta started researching and heard some buyers were sending letters to vendors to stand out.
"I did that and I put a photo in of us. It was really cheesy."
But she was willing to do whatever she could.
They weren't successful and Aneta started stressing, knowing they were going to have to ditch the First Home Grant and look for properties above $400,000.
"It was a huge sacrifice because it meant we had to cough up another $10,000 from somewhere plus the amount you're willing to pay because we were now looking in a different price bracket."
Mortgage brokers and banks suggested using the bank of Mum and Dad "but we didn't have that luxury".
So she was back to "square one".
In May this year, Aneta put in an offer on a home in Fairy Springs.
"We went to the open home and were told in the afternoon it had gone to multi-offer.
"We ended up putting an offer on of $420,000, which was way over what we wanted to spend, and we got accepted."
She managed to pull together enough funds thanks to a loan from some family members and they moved in this September.
"It was really intense. We ended up only buying a two-bedroom unit.
"The only other places available in our price range were in Fordlands."
After finally getting into her first home, Aneta said she felt "a little deflated" but relieved.
"Now, we are happy as and we've had so many barbecues with our family in our own home."
Current average property value: $755,000
Three-month change 1.80%
Three-month gain $13,000.00
12-month change 23.60%
12-month gain $144,000.00
Extra deposit required since November 2020: $28,800
Value bracket $0 - $500K
2014: 90%
2015: 91%
2016: 80%
2017: 72%
2018: 65%
2019: 53%
2020: 40%
2021: 18%
Source: OneRoof/Valocity
The financier wants $28.2m; unsecured creditors are listed as being owed another $167,000.