House prices continue skyward trend

Ross Stanway.

Average house values in Tauranga were 22 per cent higher last month than in February 2015.

The latest QV House Price Index showed residential property prices had jumped 7.4 per cent over the past three months to an average value of $565,547 and were 22.3 per cent higher in February 2016 than the February before.

QV homevalue Tauranga registered valuer David Hume said the market showed no signs of slowing but "given the similarities to the peak of the 2006-2007 property market and a reported levelling off in the Auckland, everyone is now starting to ask the question: how long can this period of rapid house price increases be sustained?".

Properties in good locations at Mount Maunganui were also setting new benchmarks, he said.

"The recent sale of a renovated three-bedroom 1950s bungalow on a 309sq m section for $905,000 at auction earlier this month is a good example of this."

The top end of the market was strengthening, "characterised by the building activity along Marine Parade at present and reported levels of inquiry from agents active along this strip".

Ross Stanway, chief executive of Eves and Bayleys Real Estate, said there had been high levels of demand and renewed interest across the board.

Eves last week had 34 properties up for auction - 23 sold under the hammer and a number of others have sold since.

Some Mount streets were also changing, particularly Marine Parade and Ocean Beach Rd, as people demolished and rebuilt homes or did serious renovations, he said.

Mr Stanway said strong economic growth across key sectors boded well for the future and it was important to look at all factors, including low interest rates and migration.

"The region is in very good shape and that is sustainable for some time yet. There are some very good foundations in place for our future."

Mr Stanway said there were also affordable house and land packages in some subdivisions.

First National, Mount, Tauranga and Omokoroa, owner Anton Jones said the jump in values was most noticeable over the past 12 months.

The company had properties that were put back on the market within a short period that had achieved big increases.

Greg Purcell, franchise owner of Ray White Realty Focus in Mount Maunganui and Papamoa, said anybody who had been on the planet for longer than 30 years knows nothing goes on forever.

"There is no question that this area has ever seen an Auckland influence in this market, in any way, shape or form in the style it has in the last 18 months. But everything comes to an end; it's just the cyclical nature of life in the universe and real estate in this instance.

"This is the third economic cycle I have been involved in and I don't how it will end. Will it end smoothly? - probably - or will it fall off the edge of a cliff?"

Tauranga Harcourts general manager Nigel Martin said the rising prices showed no signs of slowing down over the next 12 months, unless the supply of houses increased.

Mr Martin said the lower level of supply was feeding prices, as buyers competing for properties were prepared to pay more.

While the latest increase sounded like a lot, if you averaged the increase out since 2008 when the financial crisis kicked in, it was not a large increase over an eight-year period. The pricing volatility over the past year had been a supply and demand issue.