First-home buyers are starting to trickle back into Tauranga's property market as the median house price dips below $1 million, a new report says.
The exception to the rule was Western Bay of Plenty where the median house price rose in May, which local agents put down to the impact of some big sales in the smaller market.
But commentators say time will tell if reported price drops, a move to loosen criteria for funding to help buy a first home, and more property choices will result in more buyers entering the market.
Navigating tighter lending criteria, rising inflation and interest rates, and global economic uncertainty will still challenge some buyers.
The Real Estate Institute of New Zealand's latest report showed Tauranga's median house price edging back from $1 million, dropping 2.5 per cent - or $25,000 - to $980,000 in the month to May. It was the third monthly drop in a row.
Meanwhile, Western Bay of Plenty's median house price jumped 13.5 per cent - or $130,000 - to $1,090,000.
Rotorua's median house price was also down 6.2 per cent - or $43,000 - to $647,000.
REINZ chief executive Jen Baird said for quite some time agents had reported sparse numbers of first home buyers in the market.
"Only now are they beginning to reappear, albeit in low numbers."
Baird said the Government's Budget 2022 announcement last month to lift the cap on the price of property eligible for a First Home Grant and remove caps for First Home Loans was welcome news for first-home buyers.
The new price cap for using a grant to buy an existing or new home in Tauranga was raised to $800,000, up from $525,000 for an existing home. For a new build, it lifted from $600,000 to $875,000.
The May data showed 21 per cent of sales in Tauranga City were equal to or under $800,000.
In Rotorua, the new price cap has been raised to $525,000, up from $400,000 (existing) and $500,000 (new).
The May data showed 22 per cent of sales in Rotorua were for less or equal to $525,000.
"Time will tell whether these changes will result in more first home buyers entering the property market.
"Many of the properties in this price range require deferred maintenance — a liability to banks when assessing lending."
Tremains Bay of Plenty managing director Anton Jones said there was certainly a feeling first-home buyers could make a comeback.
"We have not seen it come to fruition yet, they are just getting their ducks in a row.
"Essentially it is a good time for first-home buyers to start to look if they can afford it."
Jones said the Western Bay had a fluctuating market with lower numbers of sales but some big prices pushing up the median.
The Western Bay had 31 sales compared to Tauranga's 174, he said.
First National Real Estate Tauranga general manager Cameron Hooper said first-home buyers were playing the old arcade game of "whac-a-mole".
He said they had almost left the market as inflation, interest rates and house prices continued to climb but had started to reemerge since the price caps for the First Home Grant had lifted.
But it was not the "rosy picture" some painted it to be and the cap changes should have been done months ago, he said.
Hooper said there had not been a flood of listings to the market, which was why prices were holding.
"There are twice as many houses for sale based on this time last year but open homes have been so quiet.
"People under the $800,000 and $900,000 bracket are so hesitant to make an offer and that market is in a bit of a stalemate."
The Western Bay had sought-after lifestyle properties, which attracted buyers in the upper end of the market, he said.
"The over $1m market has been more successful than under $1m."
In its annual Property Rich List on Monday, OneRoof and its data partner Valocity looked at how the growth of property values has tracked over the past five years within the top 1 per cent of the market.
In Tauranga, Mount Maunganui took the top spot with a 425 per cent - or $7,110,553 - difference between the top 1 per cent and the average property value.
The overall average in the beachside suburb was $1,672,000 but for the top 1 per cent of homes - the most expensive properties - it was $8,782,553.
May's spotlight on the Bay of Plenty
- The median house price increased 10.7 per cent year-on-year, to $905,000
- Sales counts decreased -31.5 per cent compared to this time last year
- Properties are spending longer on the market — the median days to sell increased by 20 days year-on-year from 31 days in May 2021 to 51 in May 2022
- Inventory levels increased 147.7 per cent year-on-year, and new listings by 20.8 per cent year-on-year
- The top sale was $8,220,000 in Mount Maunganui
- An annual increase of 8.6 per cent on the REINZ House Price Index to 4,249
Source: Real Estate Institute of New Zealand