Tauranga house price reaches new records, open homes cause traffic jams

House prices in Tauranga have hit another record high as demand for property gets "crazy". Photo / File

Open homes causing traffic jams, frantic buyers placing offers on houses within 20 minutes and listings attracting 1400 views in a day - Tauranga's housing market is running red hot.

Experienced real estate agents say demand for property has reached unprecedented levels, with one saying "it's crazy".

REINZ figures released yesterday show the median sale price in the city has jumped by more than $100,000 in a year and reached a new record of $810,000 last month.

The figures also show a big jump in median house prices for the wider Bay of Plenty region - rising 16.2 per cent from October 2019 to October 2020 to a new record high of $720,500.

REINZ regional director Neville Falconer said the Bay of Plenty figures also showed sales volumes increased 6.1 per cent when compared to the same time last year to 576.

Simon Anderson, managing director for Realty Group Limited which operates Eves and Bayleys, says there is unprecedented demand for property in Tauranga right now. Photo / File

However, demand continued to outweigh supply with new listings down -7.3 per cent year-on-year, which continued to put a strain on stock levels, Falconer said.

"The Bay of Plenty region is now at its lowest level of inventory since records began with seven weeks available, down from 15 weeks at the same time last year. These levels of activity are expected to continue over the coming months."

But the low levels of stock are being met with unprecedented demand, as property experts warn of "crazy" times ahead.

Simon Anderson, managing director for Realty Group Limited, which operates Eves and Bayleys, said the frenzy was already here.

Owen Vaughan, OneRoof editor, says an announcement from the Reserve Bank about LVRs has been like putting petrol on a fire. Photo / File

"In my career in real estate of 20 years, I've never seen - right across the residential market and lifestyle - where there has been so much demand in the last six to eight weeks. There are so many buyers and so many have missed out and so they are more aggressive in trying to get the next one.

"The challenge we've got is it pushes it further away from the hopeful home buyers who haven't [found a property] yet but also this is not unique to the Bay of Plenty. It's happening across New Zealand at the moment."

Anderson said he believed the demand and the spiralling prices would continue into the new year.

"There's no shortage of buyers. Providing there's stock, obviously, the market will carry on. Whether it's sustainable, there are questions around that."

Tauranga recorded 336 sales in October 2020, compared to 298 the year prior.

Anderson said he believed the demand was partly stemming from people seeking security amid Covid's impact on the world through bricks-and-mortar property, "the old, traditional Kiwi way".

Another factor was Covid prompting many New Zealanders to return home, needing a place to live, while others chose to invest in property thanks to low interest rates rather than through other options.

Managing director of Tremains Bay of Plenty Anton Jones says there is an element of FOMO fuelling a flurry of demand. Photo / File

First National Tauranga's Cameron Hooper said demand had been so high, one of his agents unwittingly created a traffic jam of would-be viewers while hosting an open home in Te Puke about three weeks ago.

"On Wednesday, a house that was placed online had already attracted 1400 hits by the end of the day ... We are getting calls 20 minutes after properties going live asking if they can make an offer.

"It's crazy."

Hooper said it was natural that such demand would translate to higher house prices.

He believed the current trend would continue for a few more months and he had seen more investors in the market than before.

"It seems to be a lot more locals buying local. We are still getting Aucklanders but nothing like before."

Managing director of Tremains Bay of Plenty, Anton Jones, said the demand right now was on par with years ago when new subdivisions in places such as Bethlehem would sell out within days.

"I think it's to do with the fear of missing out. That's fuelling things, people thinking 'I should get into the market so I don't miss out'. People have a bit more cash because they haven't gone on an overseas holiday."

First National Tauranga's Cameron Hooper. Photo / File

Jones said the market was heating up so rapidly, it had become hard for agents to list a certain price on a property.

"When you are looking at property you are looking at past data. Prices have probably gone up since then.

"Things just change so quickly at the moment, we don't know how long it's going to last."

OneRoof editor Owen Vaughan said the Reserve Bank's Wednesday announcement of potentially bringing back loan-to-value-ratio restrictions (LVRs) in March was "pretty much like putting petrol on the fire" as people race to secure property before then.

"You can be sure house prices will steadily climb and competition gets fiercer. That's going to be pretty sharp for first-home buyers in the Bay of Plenty area, especially in areas where investors have started to come back to the market."

Vaughan said he expected the next few months would become "real intense".

"The figures really show the boom is here. There just doesn't seem to be any slowdown. It's going to be a free-for-all in summer."

Rotorua also recorded a record-high median house price for the third month in a row, recording $580,000 for October 2020 compared to $485,000 in October 2019.

Western Bay of Plenty recorded a median house price of $730,000, down from $770,000 in September 2020 but still up from $561,000 in October 2019.

Advice to homeowner hopefuls

You need to research and understand the market you are dealing with. If you can find parental support or pair up with a friend to buy a property together it will help, or it may have to be you look to an area with a lower median sale price and buy in that area. That enables you to get on to the property ladder.
– Simon Anderson