Rotorua's culture, lifestyle and family-friendly reputation are attracting more people to the city, with the number of those calling Rotorua home swelling by 800 in the past 12 months.
But some believe the ability to house newcomers will stop the population surging ahead until more homes can be built.
Statistics New Zealand's annual subnational population data has been released this month, showing Rotorua's population is now 72,500, up from 71,700 in 2017 and 68,400 in 2013.
The median age in Rotorua is 36.7.
The data follows last year's updated 10-year urban growth projections which saw the Rotorua district move from low to medium growth status under the National Policy Statement for Urban Growth Capacity.
Mayor Steve Chadwick said the data reinforced the need for "future-focused projects and planning to cater for ongoing change".
"Ongoing growth is a positive for our district – without it we will stagnate and go backwards.
"During the past five years we have set out to actively change how Rotorua was trending, establishing a long-term vision for the district and building a strategic framework to deliver the vision, all with an eye on the future.
"That's not to say we still don't have challenges but we are certainly headed in the right direction.... We are now seeing increased confidence in our district as a viable and attractive place to not only visit but to live, do business and invest."
Rotorua Chamber of Commerce acting chief executive Bryce Heard said business confidence was higher than it was in previous years but "still a little fragile".
"We are getting a lot of government investment and council investment but it is still hard getting people to invest their personal dollars in the local economy, for example, to set up a new hotel.
"We are moving in the right direction though and we are getting growth across the board, not just in population."
Heard said he believed this latest jump in population could be driven by the recent surge in tourism.
Chadwick said Statistics NZ's data supported the growth assumptions made for the council's Long Term Plan.
"The growth we are seeing also highlights the need for ongoing government investment in our district and confirms the need for the Rotorua spatial plan which the council adopted this year to ensure that as we keep growing, we will do so in a sustainable, planned and well-considered way."
Housing and a need for more industrial land remained a key challenge in the face of growth, Chadwick said.
"We continue to do what we can to encourage landowners and developers to unlock land for housing and industrial development.
"The council's consenting staff report there is quite a lot in the pipeline so presumably it is a matter of timing for landowners, developers and individuals."
First National principal Ann Crossley said the growth in population was great, but housing remained a huge issue.
"If we don't have any houses for these people to live in, they can't live here. It's the biggest underlying issue."
Despite this, Crossley said people were eager to make Rotorua their home, with a big percentage of out-of-towners still going to open homes.
"People appreciate the lifestyle Rotorua has to offer. This city has, in recent years, done a very good job at making itself attractive while still being affordable.
"I am seeing a lot of the people who grew up in Rotorua and left saying they would never come back, returning to the city with their family in tow."
Rotorua Principals' Association acting president Rawiri Wihapi said while the population growth hadn't been felt in his school, the city had a number of schools for families to choose from.
"We are not in the same boat as Tauranga where the population is surging, but if we continue to grow and more subdivisions are built, there will come a need to build more schools to cater for those families."
Wihapi said Rotorua was "not too big and not too small" which could be a drawcard for families.
"But I think the biggest thing that draws people here is Rotorua's culture."
Rotorua Multicultural Council president Waitsu Wu said a "good amount" of the population growth could be attributed to migrant families being drawn to the city.
"At recent Amnesty celebrations we had 12 countries represented. We're seeing lots of migrant families moving down from Auckland or up from Christchurch because they can buy a house here and there are job opportunities.
"Immigration also gives migrants extra points if they choose to live in a smaller city so that will definitely be a driver too."
But the biggest draws, according to Wu, was Rotorua's family-friendly reputation, locals' manaakitanga and Rotorua's proximity to big cities.
"I hear many migrants saying the people here are so friendly and welcoming. Rotorua is a smaller community making it easier for newcomers to participate in activities and groups but it's also still close to those big cities like Auckland and Hamilton."
Wu said many new businesses cropping up around the city could also be attributed to new migrant families.
"Migrants are a big component in driving up business confidence in the city.
"Rotorua is a great place to live so I have no doubt the population will continue to soar."