Tauranga house values have increased by 14.6 per cent in the past year and 16.3 per cent in the Western Bay of Plenty, according to the latest monthly QV House Price Index.
Values in Tauranga are now 42.8 per cent higher than the previous peak of 2007, with an average value of $687,364. The average value in the Western Bay district is now $612,363.
The figures also show a 1.6 per cent increase in Tauranga house values over the past three months and a 3.7 per cent increase in Western Bay house values over that period.
QV homevalue Tauranga registered valuer David Hume said demand for Mount Maunganui-based properties remained strong and record prices continued to be achieved.
"Desirable suburbs around Tauranga such as Matua, Bethlehem and the Avenues are also continuing to see strong levels of demand and record prices being achieved for well-located and presented properties.
"The Western Bay of Plenty market is also showing steady demand although not at the same frantic levels seen throughout 2016 and values are still rising but not as quickly as they were."
Mr Hume said strong migration to the area and a lack of rental accommodation continued to push rents up. He said Tauranga was now the third-most expensive city in New Zealand with an average rental of $475 per week.
"Activity in the investor market is at more normalised levels to that witnessed through 2015/16 as a result of the LVR (loan-to-value) restrictions to 40 per cent equity required."
Realty Group chief executive Simon Anderson said the increase in house values was good news for property owners.
"We have seen a lot of activity at a higher end that has continued. Although there has been less sales, they were more at the top end and that end is still very active."
Mr Anderson said more first-home buyers were coming into the investor market.
He said rural and residential properties were selling for good values which had caused an increase in Tauranga and Western Bay house values.
"We are seeing the same numbers in the top end. I have seen over twice as many $1 million-plus properties sold this year than last year."
He said the increase in house price markets made it harder for first-home buyers. "But when you are on the property ladder it is a bit easier. What we have seen is an increased level of first home buyers active in the market."
The level of KiwiSaver withdrawals was higher for first-home buyers who were using that tool to get on to the property ladder, Mr Anderson said.
Ray White Te Puke owner Rochelle Carter said Te Puke and surrounding districts were growth areas.
"The booming kiwifruit industry has attracted strong interest with good returns. Ms Carter said 16.3 per cent was a large increase for the Western Bay, although Te Puke had increased by 37 per cent over the last two years according to recent QV House Price Index figures.
"Te Puke and surrounding areas are proving to be a very popular choice for people wishing to leave the larger cities."
Te Puke was looking more attractive for buyers because it allowed people to have home ownership at an affordable level, Ms Carter said. "The Eastern Link has sent buyers further afield to Te Puke and surrounding districts."
She said Pukehina was an attractive and affordable beach community that was now also accessible with the Eastern Link.
"Pukehina has seen huge growth and is now recognised as a holiday hotspot, while Maketu, Paengaroa and Pongakawa are areas that are very popular and affordable."
New homes in Te Puke and Paengaroa were selling for around $600,000 for a three-bedroom, two-bathroom family home, Ms Carter said.
"With KiwiSaver grants first-home buyers are able to purchase, given that section prices in these areas are more affordable. We have low stock levels at present and properties that are priced to sell are selling."
Ms Carter said buyers were looking further afield to towns such as Te Puke which was pushing up house values.
Across the Bay
The biggest residential property value increase in the last 12 months was in Kawerau which had increased 38.8 per cent and an average house value of $181,797.
House prices in Opotiki rose 21.8 per cent in the last 12 months, with an average house value of $294,638.
Rotorua house values rose 20.2 per cent in the last 12 months and had an average house value of $393,753, while house values in Whakatane rose 14.3 per cent and an average value of $399,082.