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Home / Bay of Plenty Times

OneRoof: Only 1% of Tauranga homes valued under $600,000

Zoe Hunter
By Zoe Hunter
Bay of Plenty Times·
5 Dec, 2021 04:00 PM6 mins to read

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OneRoof says only 1 per cent of Tauranga's total housing stock is valued at under $600,000. Photo / Getty Images

OneRoof says only 1 per cent of Tauranga's total housing stock is valued at under $600,000. Photo / Getty Images

A mere 1 per cent of Tauranga's total housing stock is valued at under $600,000, new data shows.

And almost two-thirds of the city's homes now have a value of more than $1 million.

The latest OneRoof and Valocity property report shows a dramatic decline in the number of homes valued under half a million dollars in the city.

Almost three-quarters of homes had a value of $500,000 or less in 2014 but by 2016 that number fell to 31 per cent.

The percentage of homes under $500,000 tumbled to 12 per cent in 2019 and 5 per cent in 2020. Now, the number is just 1 per cent.

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Senior research analyst at OneRoof's data partner Valocity, Wayne Shum. Photo / Supplied
Senior research analyst at OneRoof's data partner Valocity, Wayne Shum. Photo / Supplied

Senior research analyst at OneRoof's data partner Valocity, Wayne Shum, said the decline in the sub-$500,000 bracket was more rapid between 2014 and 2017.

"The city was attractive to first-home buyers seeking lower cost of entry to get onto the property ladder, but the price advantage dissipated by the late 2010s.

"The boom of 2020 to 2021 has further reduced the number of homes in this bracket, with investors and first-home buyers in direct competition to enter the market."

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OneRoof editor Owen Vaughan. Photo / NZME
OneRoof editor Owen Vaughan. Photo / NZME

OneRoof editor Owen Vaughan said the data was a "powerful" illustration of how much Tauranga's property market had shifted.

Vaughan said the $500,000 value bracket had "crunched or all but disappeared" in the Bay of Plenty.

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Managing director of the Realty Group Limited, which operates Eves and Bayleys, Simon Anderson. Photo / NZME
Managing director of the Realty Group Limited, which operates Eves and Bayleys, Simon Anderson. Photo / NZME

Managing director of the Realty Group Limited, which operates Eves and Bayleys, Simon Anderson, said the tightening of the $500,000 value bracket meant the Government's First Home Grant was now "irrelevant".

The house price cap on First Home Grants in Tauranga and Western Bay of Plenty was $525,000 for existing properties and $600,000 for new homes.

The latest OneRoof and Valocity data showed Tauranga's current average property value was $1,189,000 - a whopping $307,000 more than a year ago.

"If the Government tends to be serious about this it needs to lift that or provide other measures to assist first home buyers in the market."

Anderson said it was rare to find a property in Tauranga for under $600,000.

"It does make it a challenge for first-home buyers," he said.

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"First-home buyers have got to come up with different ways to get on the market as the market accelerates away from them."

That included joining with friends, flatmates, or leaning on Mum and Dad to get onto the property ladder and sacrificing dream locations for something more affordable.

"We know that every Kiwi wants to own their own home ...

"There are those who are desperately looking and there are some who have tried four or five times, and those who are thinking about it and decided it's too hard.

"That is the norm now."

Anderson said Bayleys hosted seminars to help get people on the property ladder, where buyers hear tips from mortgage brokers and lawyers.

"They are proving popular."

There were tears of joy and celebration when a first-home buyer was successful at auction, he said.

"But it is also heartbreaking when you see a young person outbid."

First National Real Estate Tauranga general manager Cameron Hooper. Photo / NZME
First National Real Estate Tauranga general manager Cameron Hooper. Photo / NZME

First National Real Estate Tauranga general manager Cameron Hooper said this was "the way of the world now".

"Very rarely do we sell anything that is under $600,000."

Hooper said the house price caps on the First Home Grant system needed to be revisited to help more people onto the property ladder.

More first-home buyers were using the bank of Mum and Dad to get a step up, he said.

"That's where the bulk of those guys are getting into property.

"We do feel for them. They turn up to open home after open home and then miss out at auction. It is sad to see that.

"Some of them are giving up on that Kiwi dream and looking towards the stockmarket."

But he said sometimes first-home buyers needed to lower their goals of homeownership.

"We have seen a lot of people turn their noses up at properties in the hunt for the perfect one and they find themselves missing out by $200,000 or $300,000."

Tremains Bay of Plenty managing director Anton Jones. Photo / NZME
Tremains Bay of Plenty managing director Anton Jones. Photo / NZME

Tremains Bay of Plenty managing director Anton Jones said there were very few properties valued under $600,000 anymore.

It meant first-home buyers were less likely to use Government schemes such as the First Home Grant.

"They have to work out their own way of buying a house. You've got to have your own way of saving for a bigger deposit," he said.

"You do feel for people who are trying really hard. It's being able to get those savings in place cutting out those luxuries.

"It's about moving into an area you can afford and that is not going to break the bank."

On the other end of the scale, Jones said the $1m to $2m value bracket had increased to "something I've never seen".

He said his company had sold about six properties for $1m or more in the last few weeks.

"People are willing to pay more for properties these days. That's just what happens."

Housing Minister Megan Woods said there was policy work going on into the issue of first-home products like the First Home Grants and indexing them to house prices.

"[But] a careful balance needs to be struck so the products themselves don't become a source of inflation to house prices."

Tauranga's housing market

Current average property value: $1,189,000

Three-month change: 7.70%

Three-month gain $: $85,000.00

12-month change %: 34.80%

12-month gain $$307,000.00

Extra deposit required since November 2020: $61,400

Source: OneRoof/Valocity

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