Rising property values have left some homeowners potentially sitting on a property goldmine. Zoe Hunter digs into the latest OneRoof property report and asks the experts about the trends — and how people can spend that extra equity.
Tauriko and Mount Maunganui have reaped bigger equity gains in the past five years than any other suburbs in Tauranga.
The latest OneRoof Property report looked at areas with the longest time between sales and biggest equity gains to identify where homeowners could be sitting on a goldmine.
It showed the top 10 Tauranga suburbs with the biggest equity gains, with homes in Tauriko and Mount Maunganui enjoying the most capital gain.
The average property in Tauriko worth $640,000 in 2014 had earned $450,000 by 2019, while a Mount Maunganui home worth $460,000 added $315,000 to its value in the same period.
OneRoof editor Owen Vaughan said the Tauranga and Rotorua suburbs that had gained the most in the past five years were broadly aligned with what he had seen across the country.
Tauriko gained the most because of its large sections, he said.
"With the increase in development, those sections are now highly valued."
Vaughan said Mount Maunganui was a suburb where people tended to hold on to their homes for a longer period of time.
General manager of Tremains Bay of Plenty and Waikato, Anton Jones, said Tauranga was the fifth most expensive place to live in the world.
"Tauranga has had a huge amount of growth in the last five to 10 years. A lot of people have seen it as a very desirable place to come," he said.
"The halo effect has come from Auckland, with people moving out simply because it was too expensive."
Jones said the region's "housing boom" over the last five years had been fueled by low-interest rates, investors looking for somewhere to put their money outside of Auckland, a better lifestyle and value for money.
Tauranga Harcourts managing director Simon Martin said Tauriko and Pyes Pā had big equity gains because of new subdivisions in the area.
"We've got a subdivision called The Lakes in that area so you have a lot of sections being sold and properties being built on them and being sold with a house on them."
Martin said other big growth areas were in places that don't have much land left to develop, such as the ever-popular Mount Maunganui.
His advice for people who had equity was to talk to a mortgage broker about how to increase your wealth position.
"It's certainly something to consider, how that can be used. You can use it to put money towards another property, an investment property."
Priority One chief executive Nigel Tutt said he expected the housing market to continue to increase over the next few years as supply tightened.
"This will continue to provide value increases for owners and continue to squeeze on mid-low incomes or renting."
A recent study commissioned by Priority One predicted the housing shortage would cause property prices to double in a decade without intervention and more land being made available for development.
Craigs Investment Partners head of private wealth research Mark Lister said it had been a strong five years for the region's property market, particularly in Tauranga.
"It is an area that is in demand and there has been no shortage of migrations from other parts of the country, primarily Auckland," he said.
"The region is growing, the business sector here is strong. It is completely logical all of that would be reflected in strong property prices."
Lister said the Mount was traditionally a hot spot where there was a strong market.
"If you are lucky enough to have the ability to buy in the Mount, it is one of the better places to buy," he said.
"What we do tend to see in a strong economy and property market, coastal property does really well. If we were to run into a weaker period you might see the Mount feel it harder than other areas."
Lister said Tauriko, however, was more of a reflection on the rapid growth and development of an area that was previously an undeveloped suburb.
Selling up was potentially an option for some people who were sitting on a healthy amount of capital gain, but they still had to live somewhere.
"You might have made these gains on property but you can only access those if you downsize or move to a cheaper suburb."
Lister said people could choose to put their money into the share market, another property either residential or commercial, KiwiSaver, a term deposit, fixed income, or a combination of all. But how people spend their capital gain was up to the individual.
Younger people should be thinking about long term growth, while the older generation might be more conservative, he said.