In Rotorua, the mean house value was $650,546, according to Infometrics. Photo / Getty Images
In Rotorua, the mean house value was $650,546, according to Infometrics. Photo / Getty Images
The number of million-dollar suburbs in Rotorua has hit double digits but the city's property market is still seen as affordable compared to other main centres.
The average Rotorua family would need an annual income of nearly $100,000 to buy a house, new data shows.
Infometrics' latest report lookedat average house values in the June 2021 quarter and calculated how much income people needed to buy if 30 per cent was spent on a mortgage with a 4 per cent interest rate and a 30-year term.
In Rotorua, the mean house value was $650,546. The annual income needed to affordably buy that home was $99,359.
A deposit of at least $130,100 would also be needed.
The average income, including from work and benefits, of Rotorua households is $103,000.
Infometrics senior economist Nick Brunsdon. Photo / Supplied
Infometrics senior economist Nick Brunsdon said the housing market picture in Rotorua "wasn't great" but not as bad as in Tauranga.
A family in that city would need an annual income of $152,400, plus a $198,900 deposit, to affordably buy an average house. The average household income was $95,106 - a figure that may reflect Tauranga's high proportion of retirees, who may be on modest incomes.
Brunsdon said Rotorua's average house values grew 16.7 per cent in the last year to hit $650,500.
"No one would describe Rotorua houses as cheap, but they are relatively more affordable than Tauranga, being within reach of the average household income."
But Brunsdon said household incomes were an average figure.
"In many cases, achieving a six-digit household income will require multiple family members to be working full time, and potentially other sacrifices such as taking in boarders to help save up a deposit or cover the mortgage."
The annual income to afford to buy an average home in the Thames-Coromandel District was $166,329.
Brunsdon said that illustrated how high prices for holiday houses, funded by out-of-town incomes, can greatly skew the market for locals.
Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson. Photo / NZME
Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson said Rotorua has been seen as a lot more affordable than Tauranga and Auckland.
"That's why you do see a number of people working in Tauranga and purchasing in Rotorua to get on the property ladder."
The city was also fortunate to have a "big range" of property values, he said.
According to the Real Estate Institute of New Zealand (REINZ), Rotorua's median house price jumped by almost a third in the year to July.
REINZ chief executive Jen Baird. Photo / Supplied
REINZ chief executive Jen Baird said the most common price band in the last few months was between $400,000 and $599,000, accounting for 43.4 per cent of sales.
Baird said the Bay of Plenty was a popular destination for those looking to relocate out of the big cities, which has influenced the increase in house prices over the past year.
"Bay of Plenty is also an attractive option for residential investors and developers looking for opportunities to build higher-density properties by the beach, and luxury homes, which tend to fall into the upper price brackets."
However, Baird said the Bay was also experiencing a low level of stock resulting in strong competition for available properties as demand continues to outweigh supply, thus putting upward pressure on prices.
"With the warmer months just around the corner and the easing of Covid-19 alert levels to come, more properties are expected to come to market, which may stabilise these prices."
Rotorua now has 10 $1m suburbs
Rotorua now has 10 suburbs with a median property value of $1 million, and three not far off that milestone, new OneRoof analysis shows.
It comes as a new house price index launched by OneRoof.co.nz showed the city's average property value was now $739,000.
The index, developed by OneRoof's data partner Valocity, showed Rotorua's average property value jumped 2.6 per cent from $720,000 in the three months to August 31.
The wider Bay of Plenty's property values climbed 5.5 per cent to $945,000.
James Wilson, director of valuation at Valocity. Photo / Supplied
James Wilson, director of valuation at Valocity, said 10 suburbs in Rotorua were now over $1 million with three more within "striking distance".
The city's top five suburbs with a million-dollar value were Lake Tarawera ($1.6m), Lake Okareka, ($1.4m), Tikitere ($1.3m), Ngongotaha ($1.3m) and Tumunui ($1.3m).
However, Wilson said while property values were still rising this quarter in Rotorua, they were doing so at a slower rate, declining from 8.9 per cent to 2.6 per cent.
"Demand for homes remained strong, and supply is yet to catch up.
"The region continues to attract out-of-town buyers in the remote working era, as buyers chose lifestyle over city life."
The share of first-home buyers continued to rise at the expense of first-time investors, he said.
OneRoof editor Owen Vaughan said the Rotorua market had started to cool.
"A lot of the activity that was happening in the three months to May 31 has tapered off as a result of investors and first home buyers pulling back.
"There is a bit of a sealing of Rotorua at the moment."
OneRoof editor Owen Vaughan. Photo / NZME
How much do you need to earn to buy an average house?
Rotorua:
Mean house value: $650,546 Annual income to afford to buy: $99,359 Mean household income: $103,049
Tauranga:
Mean house value: $994,708 Annual income to afford to buy: $152,434 Mean household income: $95,106
Thames-Coromandel:
Mean house value: $1,084,811 Annual income to afford to buy: $166,329 Mean household income: $69,101
