Demand for property in the Bay of Plenty continues to defy the odds as the region reaches a new record median price and logs the highest sales volumes in more than three and a half years.
According to the REINZ monthly report released this week
the median house price in the Bay of Plenty has reached
$709,000, up 17.8 per cent from $602,000 in September last year. It is the first time the region's median has exceeded $700,000.
Tauranga City logged a record median price of $780,000, Western Bay of Plenty District rose to $755,000, the Rotorua District reached $521,000 and Whakatāne District reached $661,000.
The 17.8 per cent increase was in line with a nationwide median increase of 14.7 per cent in the same timeframe and 17 per cent increase if Auckland was excluded.
But despite the rising prices, houses are selling.
Sales in the region were up 31.2 per cent from 442 in September last year to 580 last month. It was the highest sales volume in 42 months.
The Waihi Beach/Katikati area was a stand-out with sales volumes up 220 per cent.
OneRoof editor Owen Vaughan said house prices in the regions were catching up with Auckland.
"The days where buyers, investors, first-home buyers could pick up a cheap-as-chips home are gone.
"There are more buyers and you see more people at open homes and at auctions making offers and that's pushing up prices."
Applications for a first-home grant in Rotorua are capped at $400,000 for existing homes or $500,000 for new homes. In Tauranga City and the Western Bay of Plenty, the cap is $500,000 for existing homes of $550,000 for new builds.
The REINZ report showed the number of homes sold for under $500,000 nationwide also fell to 24.9 per cent. This was the first time on record more than 75 per cent of the market had sold for more than half a million dollars.
When asked if the home grant cap needed to change, Vaughan said: "Any property grants to help to get first-home buyers in the market are to be welcomed but it's got to reflect where the market is. There's no point getting a fraction of what you need to get into the market."
Tremains general manager Anton Jones said they were expecting a slow-down in the market leading up to the election, similar to previous years, but this had not eventuated
Instead, September was extremely busy as interest rates dropped and demand continued to soar, he said.
Some buyers had "spare money" knocking around from a missed overseas holiday and were choosing to spend it on investment property, he said. First-home buyers were "coming out in force" as money was "cheaper to borrow" than ever and they were able to service bigger loans, he said.
places like Katikati and Waihi Beach had had such a substantial increase because
out-of-towners were moving for the "lifestyle" and escaping places like Auckland because of the higher odds of being locked down again.
Prices would only continue to rise as interest rates dropped even further, he believed.
The report also showed an increase in the use of auctions to sell property nationwide - from 13.1 per cent to 16.5 per cent. That was reflected locally with almost 23 per cent of properties - 133 - sold under the hammer.
It was the highest in four years and more than double the 52 the previous September.
Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said auctions were the best way to sell for market value and the rising sales volumes and prices were not a surprise.
"From what we've seen in the auction room it's not a surprise at all. There are record median prices across the region.
"Given the number of sales that gives you a lot of confidence about the market but we want sustainable capital growth, not out-of-control growth."
He said the Waihi Beach and Katikati had become sought after areas due to their proximity to Auckland and Tauranga. He said many homes there were selling as holiday homes.
Anderson said sales in Tauranga for the financial year were up to 92 per cent of last year despite a drop in sales during Covid-19 lockdowns.
"The market isn't short of buyers but it may become short of listings."
He said there were still opportunities for first home buyers available but the market had changed.
"A lot are using parents help to get into the market. It's never been easy to buy your first home. There are methods to get on the ladder but it's not as simple as it once was."
He believed first-home grant thresholds needed to be reviewed as the market fluctuated.
REINZ chief executive Bindi Norwell said the figures were continuing to buck the trend.
"Normally one month out from an election, people start to take a wait-and-see approach and sales volumes begin easing off. However, 2020 appears to continue in its trend of being an anomaly.
"Sales volumes around the country continue to defy expectations."
Norwell said the market activity was being driven by low borrowing rates, consumers having more money available because of a lack of international travel.
"When you then add in high levels of confidence in the housing market, the removal of the LVRs back in March and people's fear that prices are just going to keep increasing in the future, then this explains why people are going to such lengths to secure a property now."
Norwell said the Rotorua District and Tauranga City had two months in a row of record median prices and she expected prices to continue on an upward trajectory.
"These sort of price increases have continued to defy even the most bullish of market commentators, but with no uplift in the total pool of properties available for sale, at this point, it looks as if prices will continue to rise as we head toward Christmas," she said.
"With interest rates at such low levels, investors are starting to head back into the market in high numbers and they're competing with first-time buyers for properties, which is also contributing to the price rises we're seeing in this bracket. This is making it harder for first-time buyers to get on the property ladder."