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Tauranga could get its first million-dollar suburbs as the city reaches yet another median house price record, experts say.
But it might be a few years until the city reaches a million-dollar median.
The Real Estate Institute of New Zealand's latest figures showed Tauranga ($854,000), Western Bay of Plenty ($793,500),Rotorua ($600,000) and Kawerau ($367,000) all reached record median highs in January.
The Bay of Plenty also had the second-highest percentage of auctions in New Zealand behind Gisborne, with 28.9 per cent - 99 properties - selling under the hammer last month.
OneRoof editor Owen Vaughan said it was very likely suburbs including Mount Maunganui, Matua and Bethlehem would hit the $1m mark in the near future.
But he did not see the pace of growth sustaining another $140,000 jump in Tauranga's median value to reach the $1m mark.
"In saying that, in the past 12 months it jumped $165,000 but that was because the market had been supercharged post-Covid."
Vaughan said the REINZ data supported OneRoof's own recent market figures, which showed New Zealand house prices outstripping pre-Covid prices by $130,000.
The big question for the housing market was if the latest lockdown would have an impact on prices, he said.
"The last time New Zealand's housing market was beset by alert level 2 and 3 restrictions the housing market took off, with agencies recording big sales in their online auctions.
"Stock issues and increased buyer demand remain factors in the market so it's unlikely prices will change their trajectory - even if the lockdown is extended for a period."
Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson. Photo / Andrew Warner
Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson, said based on a 10 per cent year-on-year growth the city would likely reach a $1m median in two years.
"A 10 per cent growth is $85,000 a year, so that's mid-$900,000s by next year and the year after will be $1m."
But Anderson said sustainable growth was important and currently the market was leaning towards unsustainable growth.
"But I do see that coming off during the year as the market finds its feet."
Anderson said sales volumes had dropped significantly and reflected a shortage of stock, with supply and demand driving the median price increase.
Homes under the hammer were still attracting multiple bidders creating competition and driving values for owners, he said.
"The only way to price a property to truly maximise the owners' value is to go to auction."
General manager of Tremains Bay of Plenty and Waikato, Anton Jones. Photo / George Novak
General manager of Tremains Bay of Plenty and Waikato, Anton Jones, said he did not see the city reaching a $1m median in the near future.
"It would have to go up significantly to get there and it will be a worrying day when it does.
"Incomes aren't going up by that much comparatively. That means everyone is borrowing more to buy more."
But he said the city would "100 per cent" see its first few $1m suburbs.
"It can't be far off. The first ones to get to that level will be places like Matua, the Mount and Bethlehem.
"They've historically been the higher-value suburbs."
Jones said it was no surprise the Bay was recording a high auction percentage.
"Tauranga has got a very big culture of auctions. It's very hard to find properties that aren't going to auction at the moment."
Tauranga Harcourts managing director Simon Martin. Photo / Supplied
Tauranga Harcourts managing director Simon Martin said the number of sales across January was well below average meaning prices had accelerated.
"Supply and demand is responsible for lower volume of sales and higher values. The supply side is dramatically lower."
Martin said Mount Maunganui was likely already a $1m suburb but there were many factors influencing that figure.
"We have no control over them."
Auctions still remained popular but the change in alert levels had many people phone bidding from Auckland, he said.
REINZ regional director Neville Falconer said ongoing demand and competition between first-time buyers, owner-occupiers and investors continued to drive prices higher and push sales through quicker.
Falconer said the number of days to sell was down 11 days year-on-year to the lowest level for a January month on record.
"The REINZ House Price Index for Bay of Plenty increased 22.1 per cent in January 2021 from the same time last year to a record high level of 3595, further displaying the underlying strength of property values in the region."
REINZ regional director Neville Falconer. Photo / Supplied
Bindi Norwell, chief executive at REINZ said usually, in January the residential property market slowed and prices eased off as people head to the beach for their summer holidays.
However, she said the first month of 2021 was anything but normal, as house prices across the country continued to rise with January seeing four regions reach new record median prices.
"Additionally, the fear of future price rises and the fear of missing out lingers deep in buyers' minds and is impacting people's buying behaviour as January saw a continuation of properties selling at a rapid pace.
"Last month, residential properties sold at their fastest pace for a January month in 17 years, carrying on the pattern we've seen over the past few months and therefore continuing to impact pricing."
