Tauranga's house prices have reached a record of $1,100,000. Photo / George Novak
Four Bay of Plenty districts reached record median house prices in February but the numbers of sales fell, according to new data.
A rise in out-of-town buyers eyeing up rentals may have pushed February's prices up but rising interest rates, "outrageous" lending restrictions, Covid uncertainty, and more options on the market saw the number of sales drop significantly.
The latest Real Estate Institute of New Zealand data shows median house prices in the Bay of Plenty jumped 13.2 per cent year-on-year to reach a new record of $960,000.
Kawerau ($493,000), Rotorua ($720,000), Tauranga City ($1,100,000), and Western Bay of Plenty ($1,050,000) also reached record medians.
REINZ regional director Neville Falconer said the Bay saw an increase in out-of-town buyers through February, many of them looking to secure an investment property.
"First-home buyers are finding it difficult to enter the market as changes to the Credit Contract and Consumer Finance Act (CCCFA) impacted their ability to secure finance."
The number of properties sold dropped 16 per cent annually in February from 487 to 409 - the lowest sales count for February since 2014 for the region.
REINZ chief executive Jen Baird said stock levels in the region have risen 85.5 per cent year-on-year to 1408 in February 2022 from 759 in February 2021.
"Buyers can now take their time to look for a property. Time frames for conditions have
extended — sales are not as quick and straightforward as previously."
Chief executive of the Realty Group, which operates Eves and Bayleys, Heath Young said year-on-year percentage increases were slowing.
"It is quite feasible that these increases will level off to single-digit growth for year-on-year comparison in the coming months."
Young said the rise in median prices for February in the Bay of Plenty was encouraging but there was a "huge amount" of variables impacting house prices.
"While interest rates, availability of credit and general uncertainty through Covid is causing concern, factors such as regional migration, low levels of unemployment, supply of new builds all have some form of direct or indirect impact on the supply versus demand equation that drives property prices.
"The government reducing some parts of the criteria and providing better guidance for mortgage lending should have a positive flow-on effect for the availability of funding for purchasers."
Harcourts Rotorua sales manager Michelle Matthews said February's new record was largely due to the number of properties selling for above $1 million.
Thirteen properties sold for more than $1m in February and there were about 100 above $900,000 currently for sale, she said.
"While the lower end of the market continues to be challenged due to restrictions imposed on banks and the impact this is having on first home buyers and investors, these restrictions are due for review but realistically won't take effect until mid-year.
"Stock levels continue to rise significantly, meaning more choice for the buyers who can now take their time looking at property. As a result, days on market have also crept up."
Harcourts Tauranga managing director Simon Martin said the number of properties on the market in the last six months had risen "well over 100 per cent".
However, while there were more houses on the market, there was less demand which was putting pressure on prices, he said.
Martin said stricter lending criteria had meant first-home buyers were taking a bit longer to get on the property ladder.
"Our average sale price has increased substantially and the reason being is the people buying higher properties don't need as much funding. It hasn't really affected them. It means we have sold more at the top end."
There were fewer unconditional buyers compared to six months ago, with one agent having about five unconditional offers on a property but a list of about 20 other conditional buyers expressing interest, he said.
Tremains Bay of Plenty managing director Anton Jones said there have been some challenges with the stricter finance rules.
"It is a problem. It just seems outrageous."
Jones said Covid had scared some people off and there were fewer people through open homes during February but numbers had started to pick up in the last few weeks.
"Certain properties are attracting high numbers of people. The well-presented properties are selling well."
Vendors were still wanting high prices for property and will have to re-evaluate their expectations, he said.
"If you're realistic in your price expectations you will still sell."
Ray White Rotorua owner and principal Jacqueline O'Sullivan said there was more stock to choose from.
However, there was a "drastic drop" in interest and open home attendances, and prices were stabilising but not increasing as they did last year.
"Be careful not to overpromise and then realise that we won't be able to deliver as buyers have more to choose from, banks are tight with lending restrictions and all has an effect on the $500,000 to $700,000 price range (first home buyers and investors)."
O'Sullivan said there was still good interest in the more expensive properties where often finance was not a major requirement.
"Market forces are changing, streets and places seemed deserted at times, everything is so expensive now, all having an impact on the affordability of real estate."
Harcourts agent Lewis Ramsay, who specialises in Kawerau property, said properties were still selling for between $300,000 and $400,000 in 2021.
A lot of out-of-towners were buying rentals that needed a bit of tidying up, he said.
"A lot of those older 1950s to 1960s originals have been done up now."
Now, those properties that were bought in 2021 for mid-$300,000 were selling for $400,000 or above.
Higher-standard three-bedroom homes were selling for $480,000-plus and brand new properties in a new subdivision were expected to be on the market for $700,000-plus.
"For many years Kawerau has been undersold but seven or eight years ago it all changed.
"The retirees and first-home buyers started pouring in.
"It's just being discovered."
Median property price:
- Bay of Plenty ($960,000)
- Kawerau District ($493,000)
- Rotorua District ($720,000)
- Tauranga City ($1,100,000)
- Western Bay of Plenty District ($1,050,000)
Number of properties sold:
Residential property sales dropped 16.0 per cent annually in February, from 487 to 409.
This was a 78.6 per cent increase compared to January when 229 residential properties were sold.
Inventory:
Total inventory levels jumped 85.5 per cent, from 759 properties in February 2021 to 1408.
Median days to sell:
The median days to sell was 44 - up 14 days on the same time last year.
Top sale for the region
$7,650,000 in Tauranga City
Source: Real Estate Institute of New Zealand
Trade Me Property’s latest Rental Price Index is out.