Agents say the property market has "dramatically" shifted in the buyers' favour. Photo / Getty Images
The Bay of Plenty's property market has seen a dramatic shift to a buyer's market, agents say.
It comes as Tauranga's median house price dropped 5 per cent to $1,045,000 in March from $1,100,000 in February, following a trend seen in other main centres.
It is the first month to show a drop since November, when the city's median price went down 4.5 per cent to $1,002,500.
Other Bay towns including Whakatāne and Kawerau, had median price drops between 4.3 per cent and 7.7 per cent.
But Rotorua and Western Bay of Plenty bucked the trend climbing 6.9 per cent and 4.8 respectively to record high medians of $770,000 and $1.1m.
REINZ regional director Neville Falconer said stock levels in the Bay rose 73.8 per cent year-on-year and listings were up 11.5 per cent.
Falconer said like many regions around the country, the supply of property in the Bay now outweighed demand.
"With market headwinds such as changes to the [CCCFA Credit Contract and Consumer Finance Act], rising interest rates, the re-introduction of loan-to-value ratios and Covid-19 adversely impacting buyer demand, open homes have seen fewer attendees, and auction rooms have been emptier than they were this time last year.
"Sales activity also saw a decline — down 25.7 per cent year-on-year."
Property Brokers regional manager for the Bay of Plenty, Simon Short, said increasing stock levels meant the Fomo - fear of missing out - factor was now not as prevalent.
"The balance of power has moved across the ledger. Buyers have more opportunity to be able to negotiate because the supply is extensive and demand diminishing."
But he said first-home buyers were facing inflationary pressures, which were impacting interest rates and making it harder to secure finance.
Chief executive of the Realty Group Ltd, which operates Eves and Bayleys, Heath Young said the data showed there had been a "logical shift" in market conditions.
The market quickly switched from more demand than supply to now supply outstripping demand within a short period, which appears to have affected most price ranges, he said.
Young said depending on the first-home buyer's situation, this could well be a good time to buy.
"There are some early signs that some lenders are slightly relaxing debt to ratio caps caused by the unintended consequences of the CCCFA.
"The key for them is to ensure that they surround themselves with the right advisers in terms of their finance broker and real-estate agent, to understand what's happening, what their options are and be in the best position to decide, when they find the property, they want.
"Just because the heat may have come out of the market, in terms of the number of willing and able buyers, does not mean they won't face competition."
Rotorua Professionals McDowell Real Estate principal Steve Lovegrove said the market had "dramatically turned".
"We still have a housing shortage but the appetite from buyers has been subdued because of the lending rules, inflation and interest rates.
"Buyers are not competing with buyers any longer."
But Lovegrove warned: "Vendors are now competing with other vendors."
Just weeks ago buyers did not have much to choose from but now they did.
"Because of that, how a vendor markets, presents, and more importantly prices, their property is going to be critical to getting sold.
"Now, if a vendor wants to move on to sell they might have to look more willingly at what the buyer is offering and remembering they don't have the same access to money they did before.
"Vendors are now going to have to adjust their expectations."
Lovegrove said there were 50 per cent more listings than normal but properties were selling at half the rate.
First home buyers were "extremely nervous" at the rising cost of servicing a mortgage.
"That is crushing a lot of enthusiasm."
Tremains Bay of Plenty managing director Anton Jones said listings had almost doubled.
"It has certainly jumped up a lot, getting us back to some normality.
"There are still buyers out there, they've just got more to choose from. The ones that are looking are actually looking to buy."
First National Real Estate Tauranga general manager Cameron Hooper said about six months ago he had suggested first-home buyers just "wait six months".
"It's worked out perfect timing for first-home buyers because look where we are at now."
The "knee-jerk reaction" to the CCCFA and rising interest rates had put the breaks on the property market, he said.
"Buyers are conscious of paying too much for a property. It is completely different to what it was last year when people were fetching crazy prices but it is chalk and cheese from 2021 to 2022."
Hooper said there were 10 per cent more properties coming onto the market each week, however, now the knee-jerk reaction had happened, vendors who did not need to sell would wait it out.
Ray White Rotorua business owner and principal Jacqueline O'Sullivan said the drop in open-home attendees and active bidders at auctions was "quite noticeable".
O'Sullivan said listing numbers were climbing, properties were taking longer to sell, and buyers had more choices and weren't willing to put "crazy money" on paper.
However, sought-after areas were still demanding premium prices and getting them.
"Since March 2020, we have not been able to spend money on travel etc, a lot of that has gone back into housing and improvements."
O'Sullivan said first-home buyers and investors would come back into the fold now.
"In the last couple of years, your offers had to be as clean as possible to compete and secure a property.
"We are seeing a lot more of the 'subject to house sale' contracts coming through with time frames up to eight weeks for conditions to be satisfied, whereas last year in that position you would probably have been on the back foot in a multi-offer situation and not able to bid at an auction."
Rotorua District: $720,000 to $770,000
Western Bay of Plenty: $1,050,000 to $1,100,000
Tauranga City: $1,100,000 to $1,045,000
Whakatane District: $820,000 to $785,000
Kawerau District: $493,000 to $455,000
Bay of Plenty: $969,000 to $937,000
Source: Real Estate Institute of New Zealand
Liam Dann takes a deeper dive into the week's economic news.