Tauranga's median house price hovers above $1 million

Property experts predict what the market might look like in 2022. Photo / Getty Images

Tauranga's million-dollar property market has again outperformed expectations despite Covid-19 disruptions, real estate agents say.

But official cash rate increases, Government legislation to curb investor appetites and tightening credit conditions may cause some "headwinds" heading into 2022.

The latest Real Estate Institute of New Zealand data showed the city's median house price has hovered above $1m the past two months, recording $1,002,500 in November - $167,500 more than the same month last year.

REINZ chief executive Jen Baird said Tauranga City was considered one of the tighter housing markets in New Zealand, with one of the higher median prices outside of Auckland.

Tauranga's median house price hit a new record in October reaching above $1 million for the first time, she said.

"Tauranga is one of New Zealand's fastest-growing cities."

REINZ chief executive Jen Baird. Photo / Supplied

Baird said the Bay of Plenty was an attractive alternative to New Zealand's big cities and that desirability underpinned the strength of residential property prices.

"As New Zealand moves to the traffic light system and people can get around more, it's expected this trend will continue."

Prices in the region have continued to climb in the past year and for the first time in a while, inventory levels had jumped by 10.6 per cent annually and listings increased 1.4 per cent, heralding good news for buyers, she said.

"Looking forward to 2022, headwinds are gathering in terms of OCR increases, Government legislation to curb investor appetites and tightening credit conditions.

"Strength remains in the market. So, while price growth may stabilise, demand remains, lending life to the market."

REINZ regional director Neville Falconer said the market was beginning to slow, with the usual mid-November spike in activity being more subdued.

Having more properties on the market had seen median days to sell increase by three days from 30 in November 2020 to 33 in November this year, he said.

"Investors were not as active in the market in November, and this was particularly
noticeable when Auckland and Waikato were in alert level 3 restrictions.

"First home buyers were also less prevalent with many turned down for pre-approval."

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 population growth and the arrival of new businesses had fuelled demand in Tauranga's property market.

"We have seen a market outperform what we thought it would as far as values go.

"We have seen a market have very strong auction results and new record sales."

Anderson said the fear of missing out had driven huge growth in property values across the region.

"What we are now seeing is that the number of listings coming to the market have significantly increased. It is going to give buyers more choice. Now buyers have got options."

The sense of urgency to act was easing but there was still a strong market for buyers, he said.

"We are still seeing people expecting high sale prices for their properties but buyers are saying 'that's enough', which means owners may have to adjust their level of value.

"But it's not a panic situation, it's just a subtle market change."

Anderson expected a few casual lookers over the Christmas break before the market picked up at the end of January.

"Activity will be strong in February."

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

Tremains Bay of Plenty managing director Anton Jones said despite the stop-start of Covid-19 lockdowns and restrictions, the market has since performed really well.

"It caught up ... We almost put 10 months into a full year again."

Jones said the company had a record month in November.

"The spring surge of listings didn't happen until last month."

He was not sure where the market would head in 2022 but he hoped the "silliness" would be taken out of the market.

"I would imagine it will be a good summer."

Harcourts Tauranga managing director Simon Martin. Photo / Supplied

Harcourts Tauranga managing director Simon Martin said trying to predict how the summer market would perform was like holding a crystal ball.

But he expected there to be some "headwinds", with rising interest rates on the horizon, and the Covid-19 traffic light system would allow people to move around more freely.

"People tend to make decisions in lockdowns as shown last year, it will be interesting to see how that affects the market."