Rotorua median house prices have fallen by $70,000. Photo / NZME
Rotorua median house prices have fallen by $70,000. Photo / NZME
Rotorua's median house price has fallen the most it has in eight years, dropping $70,000 in a month.
Fear of overpaying is replacing the fear of missing out, while rising interest rates and tighter lending criteria were factors in the drop, agents say.
Rotorua's median price dropped $70,000 - or9.1 per cent - to $700,000 between March and April, according to the Real Estate Institute of New Zealand's (REINZ) latest figures.
Western Bay of Plenty's median house price dropped $140,000 - or 12.7 per cent - to $960,000 in April while Tauranga's dropped $59,000 - or 5.6 per cent - to $991,000.
Across the region, the median price was down four per cent and sales were down 29 per cent.
It was also taking an average of 41 days to sell a property, five days more than March and 11 more days than April 2021.
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REINZ chief executive Jen Baird said the last time the city's median house price had dropped this much was in March eight years ago when it fell $72,000 in a month.
Rotorua Professionals McDowell Real Estate principal Steve Lovegrove said the price drop reflected people's affordability and access to money.
But Lovegrove said buyers had more choices with more houses on the market, meaning vendors were competing against each other.
Rotorua Professionals McDowell Real Estate principal Steve Lovegrove. Photo / NZME
There was no need to panic for people who could hold onto their houses, but those who bought last year hoping to make a quick profit were out of luck, he said.
While he said he could not predict what would happen in the short-term, "property prices would always increase in the long term".
First National principal and Rotorua REINZ spokeswoman Ann Crossley. Photo / Andrew Warner
First National principal and Rotorua REINZ spokeswoman Ann Crossley said first home buyers had almost been non-existent.
"They might be sitting and waiting, thinking house prices are going to drop. But I think they should not be waiting. I think they should be fixing their mortgages and getting on with it."
Crossley said most of the market activity was with the second or third home buyers, however property was taking longer to sell.
"There is not that frenzy or 'sell in two weeks' scenario."
Property Brokers regional manager for the Bay of Plenty, Simon Short, said the drastic price drops came down to interest rates.
"We all saw it coming and it's here now, it's a buyer's market."
He believed it would continue to drop as interest rates rose.
Property Brokers regional manager Simon Short. Photo / Supplied
Tremains Bay of Plenty managing director Anton Jones said vendors were finding the market difficult as there was more choice for buyers who previously had to wait or enter bidding wars.
Jones said school holidays and long weekends were a factor in the drop, with property listings jumping from 50 to 90 during the first week back at school.
Tremains Bay of Plenty managing director Anton Jones. Photo / NZME
First National Real Estate Tauranga general manager Cameron Hooper said he had not seen a drop in price like this since the Global Financial Crisis (GFC).
"That's the first time in a long time that under 200 houses have sold in Tauranga City ... it's pretty scary knowing we're at 160," he said.
"I think next month will be just as bad."
He said the "only positive" was that there was not a flood of listings as this could push prices down further.
High interest rates, fear of paying too much and an inability to get finance from banks had softened the first and second home buyer market, he said.
The "dream price" of last year was gone and people who had to sell would likely have to drop their price.
"If you pay five or 10 per cent too much for your property and it's your first or second home, that's wiping out your entire equity in that house.
"If I was a first home buyer I wouldn't be buying a home now, I'd just let it settle and wait for spring or summer."
First National Tauranga director Cameron Hooper. Photo / NZME
Mortgage Lab owner and chief executive Rupert Gough said the numbers were "disappointing" but not unexpected.
Gough said getting finance was "so much harder and complicated" than last year and there was not an influx of Aucklanders looking to move down.
He said it was a "self-perpetuating cycle", as people who were not confident that they could sell their house would not put an offer on another.
However, buyers had more options and competitive prices.
"Until you see some sort of flattening out, people are going to be wondering where the bottom of the drop is ... it wouldn't surprise me to see further drops."
The Mortgage Lab owner and chief executive Rupert Gough. Photo / NZME
Economics commentator Tony Alexander said Rotorua prices dropped 3.6 per cent in the three months to April compared to the three months to January.
He said the drop reflected the fact that buyers had stood back from the market in the face of the rising cost of living, interest rates going up, and the fear of missing out going out the back door.
