Opposition leader Andrew Little, who was in town yesterday, pledged to tackle housing problems by cracking down on tax breaks, building cheap homes on an industrial scale, and forcing foreigners to build new homes rather than buy existing ones.
"If you want to own from overseas then you have to build," he said. "There's no question - we have to add to supply."
The Government has introduced loan-to-value rules which force most investors to find 40 per cent deposits to buy properties, but local real estate agents told the Bay of Plenty Times that investors were starting to creep back into the market after finding ways to get around the restrictions.
Despite the heavy presence of investors in the housing market, data from the past few months suggests that Tauranga prices have flattened out. CoreLogic backs this, stating that prices are steady in Tauranga and have started dropping in Auckland.
"The house price index showed almost no change in value between December and January, a significant change from the rapid growth over the previous year," the report said of the Tauranga market.
"Other measures of value we are tracking show that the index is likely to remain flat in the coming months."
The average value of housing stock in Tauranga was given as $672,750. This was based on a range of measurements, including median and mean averages.
"The share of sales to Auckland investors continues to climb," the report said. "This could reflect a motivation by those buyers to eventually retire to Tauranga, rather than a pure investment decision."
Data analysis firm Infometrics said it expected national house prices to drop by an average of 12 per cent over the next three or four years due to a "cocktail" of factors.
Chief forecaster Gareth Kiernan said interest rates were likely to rise from the middle of next year, forcing homeowners to pay more for their mortgages.
"Net migration and population growth will be easing at the same time, and this cocktail could be the catalyst for a housing market correction," he said.
A major real estate firm backed the warning about interest rates.
First National chief executive Bob Brereton said mortgage-payers could face hardship over the next 18 months if they failed to take this into account.
"A 1 per cent rate increase on a $500,000 mortgage would increase your repayments by around $100 per week," Mr Brereton said. "For some people that could be a tipping point".
Nationally, the collective value of homes has just nudged past the $1 trillion mark. Nearly a quarter of that value is owed to banks.
Statistics NZ said population growth should slow down in the Bay of Plenty from the end of next year, averaging 0.8 per cent a year until 2043.
Who's buying?
- Movers: 34 per cent
- Multiple property owners: 30 per cent
- First home buyers: 14 per cent
- Auckland multiple property owners: 10 per cent
- New to market other: 5 per cent
- Re-entry: 5 per cent
- Others: 1 per cent
Source: CoreLogic
