The number of property sales in the Bay of Plenty has plummeted 41.3 per cent in the last year. Photo / Getty Images
The number of property sales in the Bay of Plenty has plummeted 41.3 per cent in the last year. Photo / Getty Images
The number of property sales in the Bay of Plenty has plummeted 41.3 per cent in the past year, new data shows.
It comes as Tauranga's median house price dips under the million-dollar mark for the third month in a row.
Property commentators expect prices to keep falling until themiddle of next year, but there is "light at the end of the tunnel". Although Tauranga will take a little longer than Rotorua to recover.
The latest Real Estate Institute of New Zealand figures show the Bay had the second-biggest annual fall in the number of sales behind Auckland in the year to June.
The number of sales in the region dropped 41.3 per cent - from 458 to 269 across the year. Auckland recorded the biggest drop of 43.3 per cent - from 2853 to 1618.
Tauranga's sale count also dropped from 278 in June 2021 to 170 last month, while Western Bay of Plenty's sales fell from 47 in June 2021 to 24 last month. There were 183 Tauranga sales and 31 in Western Bay in May.
The city's median house price also fell 3 per cent - about $30,000 - to $970,000. In May it was $980,000 and in April it was $991,000.
Western Bay's median house price dropped 11 per cent - or $120,000 - to $970,000.
Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Heath Young. Photo / Supplied
Heath Young, managing director of Realty Group Ltd, which operates Eves and Bayleys, said the number of deals being completed in the Bay compared with long-term averages had been falling since about September.
Young said the average number of properties sold in Tauranga in June in the past 16 years was 274 versus 170 this past June.
"In fact, 170 is the lowest number of deals completed in any June month over the past 16 years.
"The cause of this has been widely commentated and comes down to buyer confidence around interest rates, availability of credit and fear of paying too much."
New listing numbers were still consistent with previous years and plenty of stock was available, he said.
"This trend cannot continue ... The expectation is that this trend will gradually reverse as some of the certainty around interest rates and inflation improves."
OneRoof property commentator Ashley Church said there were two reasons for the dramatic drop in property sales throughout the region.
The first was the changes to the Credit Contracts and Consumer Finance Act (CCCFA) in December.
"That has another chilling effect on the market. People who might have wanted to buy suddenly had second thoughts."
Now new, more-relaxed CCCFA guidelines have been introduced, and the Reserve Bank has raised its official cash rate to 2.5 per cent in its latest bid to head off inflation.
"There is light at the end of the tunnel," Church said.
"This has just been a blip in the market and things will start to settle down."
Church said Rotorua would recover faster than Tauranga because it was a more affordable market.
"It costs less to buy there and therefore the Rotorua market has remained as a market for first-home buyers, owner-occupiers, and to lesser extent investors."
Whereas Tauranga had prices similar to Auckland, he said.
Church said the Bay market would look a lot more subdued in the second half of the year as "cautious confidence" returned among buyers.
"There are signs, particularly in Rotorua, of things returning to normality. Tauranga will take a bit longer, but it will come out the other side too."
Independent economist Tony Alexander. Photo / Fiona Goodall
Independent economist Tony Alexander said people could expect prices to keep falling for the second half of the year.
That was because factors such as rising interest rates and cost of living, tightening of the loan-to-value ratios, and changes to the CCFA were still in play.
There had also been a correction of exorbitant prices, with buyers no longer having FOMO - fear of missing out; and FOOP - fear of overpaying.
"I expect prices to have stopped falling in most parts of the country by the middle of next year."
REINZ regional director Neville Falconer. Photo / Supplied
REINZ regional director Neville Falconer said the Bay of Plenty's median house price jumped 8.4 per cent year on year to $900,000.
"Owner-occupiers and first-home buyers are the most active in the market, whereas investors remain quiet, largely due to tax legislation.
"Vendors are slow to adjust their price expectations to current market dynamics."
Falconer said buyers still feared overpaying, resulting in hesitancy in the market and a decline in sales counts, and properties were spending longer on the market compared with this time last year.
"Agents say this cycle of the market is a challenge as they guide buyers and sellers through a changed landscape and a stronger negotiation process."
Property sale numbers
The greatest annual percentage decreases were
• Auckland, which decreased 43.3 per cent annually from 2853 to 1618 • Bay of Plenty, which decreased 41.3 per cent annually from 458 to 269 • Gisborne, which decreased 39.5 per cent annually from 43 to 26 • Taranaki, which decreased 39.4 per cent annually from 198 to 120. Source: Real Estate Institute of New Zealand
