"A lot of young families are buying up in this area and it is undergoing a real transformation as a number of older dwellings are being renovated or demolished."
Papamoa continued to show good value growth, with developers reporting a lack of stock to meet the market, Mr Hume said.
"The recent completion of the Eastern Link motorway and the Sandhurst Drive off-ramp has greatly improved accessibility to the area."
Eves and Bayleys Real Estate chief executive Ross Stanway had thought it inevitable the average value would tick over $500,000, the way sales and demand were going.
Increased buyer activity and reasonably low stock numbers continued to drive prices up, Mr Stanway said. However, first-home buyers should not feel discouraged because the $350,000-$450,000 range was still a busy market.
"What it will hopefully do is encourage more people to put their property on the market, providing more supply for the demand," he said.
Harcourts managing director Simon Martin said its average sale price had been around $500,000 for about a year, so he was not surprised the QV figures reached that mark.
There was no sign of the market slowing, with interest rates falling and the economy looking so positive, he said. "People have the ability to spend more on a property with interest rates going down."
Someone on the same income as a few years ago could now afford to spend more because of the difference the lower interest rates made to their mortgage payments, Mr Martin said.
Mount Maunganui and Papamoa Ray White Realty Focus franchise owner Greg Purcell believed the latest figures reflected Tauranga growing to be an important city.
Tauranga was no longer known as the place people came to retire. It was attracting young couples and families, investors and businesses.
He thought the flow-on from the Auckland market had really hit Tauranga last Christmas.
"Suddenly we're on the shopping list," he said. "People [in Auckland] went 'I don't want to fight this battle any more'.
"And when you look at nice places to live in New Zealand, we're right up there."
Growth in major infrastructure was also encouraging for the city, Mr Purcell said.
First National Mount Maunganui, Tauranga and Omokoroa owner Anton Jones said he was surprised to see the average pass the $500,000 mark.
However, he had seen prices leap about $55,000 in a matter of four months in some cases.
The demand was there, so people were prepared to pay the increasing prices, Mr Jones said.
He noted the market had seen similar highs in 2006 and 2007 before falling back.
Couple push budget to buy in hot market
Dan and Lindsay Faris bought their central Tauranga home in June.
The couple moved from Auckland this year and began searching for houses straight away.
"Married with a young family, home ownership has always been a goal but it was just out of reach in Auckland," they said.
But on arriving in Tauranga they realised they had come from one hot property market to another.
They had bid at one auction, were preparing for their second and had a few other properties in the pipeline when they found out about their future Avenues home through friends of family.
"We had a price in mind but we had to push ourselves a bit more to get there."
They realised to get the house they wanted they would need to give up their chance at a KiwiSaver HomeStart grant which only applied for houses of $450,000 or less. The couple pushed their budget.
They also hoped the growing value of their home in this market would help them potentially negotiate a better rate on the floating portion of their mortgage interest rates.
Despite the hot market in June that they were buying in, Mr Faris said he was relieved they got in when they did.
