Tauranga’s median house price drops to $800,000, first time in two years

Tauranga property prices have dropped. Photo / Mead Norton

Tauranga’s median house price has fallen to $800,000 for the first time in about two years and first-home buyers are taking advantage.

The latest Real Estate Institute of New Zealand report showed Tauranga’s median house price dropped to $800,000 last month. That was 14.4 per cent - or $135,000 - down from December and 24.5 per cent - or $260,000 - from last January.

The last time Tauranga’s median house price was $800,000 was in September 2020.

The Western Bay district’s median dropped from $1 million to $950,000 — last January it was $991,500.

For the wider Bay of Plenty, the average was down 18.8 per cent year-on-year to $765,000. Properties were taking an average 63 days to sell - up from the 10-year January average of 52 days.

Heath Young, chief executive officer of the Realty Group Ltd, which operates Eves and Bayleys. Photo / Supplied

Heath Young, chief executive officer of the Realty Group Ltd, which operates Eves and Bayleys, said there were certainly fewer deals being done this January compared to the previous one, which was consistent with the last year.

First-home buyers and investors had performed “very well” as 80 per cent of deals completed in January were at prices at median price point and below.

Young said that this month, Cyclone Gabrielle had been affecting the number of people attending open homes.

“But is still too early to tell whether there will be any wide-ranging impacts on markets in our regions.”

Tim Short of Property Brokers Pāpāmoa. Photo / Supplied

Tim Short, of Property Brokers Pāpāmoa, said first-home buyers were the most active buyer demographic in the market at the moment “by a long shot”.

“I think it is a combination of summer always being a good time to buy and it feels like those first-home buyers who have been waiting for a price drop are now feeling like they have a chance.

“They have got vendors who are leaving the market and it means those properties under $750,000 are flying out the door.”

Property Brokers Bay of Plenty and South Waikato regional manager Simon Short said the January 2022 figures were coming off the peak of the market in November and December 2021.

“January’s annualised figures would probably be a bit of a washover of the busy times of that market.”

But there was no doubt there was a “lack of appetite” in large sectors of the market, with banks not forthcoming with loans and expiration dates being enforced.

Simon Short of Property Brokers. Photo / Supplied

Buyers were also facing the uncertainty of the cost of living, inflation, and record-high interest rates.

“There is still money in the market, it is just that the competition has definitely left the room.”

Short said the weather had played its part in the last few weeks.

“Our Hawke’s Bay and Gisborne markets are completely decimated. The whole infrastructure of their economy is now under huge pressure because they are rural communities, apple orchards, and kiwifruit. There is a huge amount of loss of infrastructure. That is going to have a flow-on.

“But as for the Bay of Plenty, Whakatāne, Ōpōtiki, and Taupō were brushed a bit closer to the cyclone than what we did here in Tauranga.

He expected activity would quickly rebound from the storm slump.

Looking forward, Short said a lot of buyers seemed to be observing the pulse of the market, attending auctions but not bidding.

“The demand and urgency … have come out of the market.

“I think this year presents some fantastic opportunities for buyers because prices have retracted so much.”

REINZ regional director Neville Falconer. Photo / Supplied

REINZ regional director Neville Falconer said first-home buyers, as well as people downsizing for retirement in Tauranga and Rotorua, were active.

“Open homes saw improved attendance, with many prospective buyers interested in transacting provided they can secure finance,” he said.

He said recent flood events in the upper North Island may have a flow-on effect by adding to inflation challenges, and Bay of Plenty salespeople were saying it added further uncertainty to the local market.

“Securing finance and rising interest rates continue to restrict market activity, however, some educated vendors are coming to the market with inventory up 60.9 per cent on this time last year.”

In his OneRoof column this week, independent economics commentator Tony Alexander explained seven reasons why first-home buyers were returning to the property market.

These were: fears of shockingly high interest rates easing as banks cut fixed mortgage rates for two-plus years; strong feelings of job security; an easing of lending criteria as real estate turnover fell; high stock level; minimal competition at auctions and open homes; house prices falling as incomes rose; and a potentially worsening rental shortage and rising rents.