"A lot of them are from garage sales, op-shops, friends and family, and occasionally I buy something. I try and buy one new thing a year," she said.
The 61-year-old has always loved Christmas and sharing it with her children and grandchildren. "I just have a passion for celebrating Jesus and everything that comes with it."
She is not interested in the commercial side of the season, or buying big presents. "I'd rather just get family together," she said.
It took four trailer-loads and five car-loads to get the collection from her Merivale home to Bethlehem, and perfecting the display has been a week's work for Ms Gunderson and her friend Wendy Cropp.
Among her favourites are the "Gundy Orchestra", including a saxophone playing reindeer, and the "Gundy Choir" of Baby Bear Santa Bears.
She has at least three working trains, including a green, red and white one with movable tracks, which is proving a hit with visiting children, snow globes, nativity scenes and miniature buildings lit up with Christmas lights.
For the last few years, her home has been opened to the public in the evenings each Christmas with local churches, family and friends going to enjoy the display. "It's really through those people that they suggested I should get a shop," she said.
When the New Year begins her Christmas collection is packed up and stored in a spare room in her home and her daughter's basement.
Ms Gundersen said the collection's return to Bethlehem next year would depend on her breaking even on the cost of batteries, with about 500 currently bringing the display to life.
Bethlehem Town Centre manager Andrew Wadsworth said Mrs Gundersen's collection was a great addition to the centre, which is home to the Bay's largest Christmas tree and will host Bethlehem Baptist Church's "A Night Before Christmas" community event on Saturday, December 21.
