Tauranga housing value growth slows in latest QV data

The Tauranga market is continuing to rise, according to the latest QV House Price Index, but at a much slower rate than before the loan to value ratio (LVR) restrictions introduced late last year.

Home values in Tauranga City were up by 18.3 per cent year on year and 0.6 per cent over the past three months, with an average value in the city of $676,381. Meanwhile, Western Bay of Plenty values are rising slightly faster and were up 18.7 per cent year on year and 3.3 per cent over the past three months. The average value in the Western Bay district is now $590,608.

Priority One communications and projects manager Annie Hill said a key point to note was that Tauranga was adding significantly to its housing stock, with 124 new dwelling consents issued by the Tauranga City Council in March alone.

Ms Hill said she was fielding 70-odd inquiries a month from people wanting to relocate to the area.

"We remain a very popular place for people to move to. I think we've got to a point where we want the housing market to plateau off a bit, so our affordability doesn't threaten our ability to attract the people we want to move here."

QV homevalue Tauranga registered valuer David Hume said that, as in Auckland, the high end of the Tauranga market was doing well with some record prices achieved. "There have been large value increases in the $1 million-plus bracket of the market as local and out-of-town cash buyers not affected by LVRs continue to move to or invest in Tauranga."

But at the low end and mid-range of the market things were less frantic, he said.

"Rather than seeing 10-way multi-offers on a property after the first open home, we are seeing the market return to a more normal situation with good demand for property and slightly fewer offers on each property, now Auckland investors are less active in the market here."

First home buyers were active but were finding that while the LVR changes have seen less competition from investors for entry level property, stricter lending criteria and higher prices were making it more difficult for them to gain finance to buy.

Harcourts Tauranga co-managing director Simon Martin noted that QV prices tended to be slightly more historically based than those issued by REINZ because QV only added to their data when properties settled, rather than when they went unconditional.

"We are actually starting to see investors and first home owners beginning to get around the restrictions," he said. "As time goes on, they save more for the deposit, or reassess what they can afford to buy, and we're seeing a few more of the lower end properties starting to move."

Bayleys Tauranga branch manager Dickie Burman echoed Mr Hume's comment that there was still high interest at the top end of the market.

"There is a demand for very good quality properties," said Mr Burman, who is also Tauranga district forum leader for the Real Estate Institute of New Zealand.

"We've had multiple offers and good clearances at auctions in March. For me, it's all very positive."

Mr Hume said many first-home buyers were looking outside Tauranga for more affordable property in Te Puke, Te Puna and other outlying rural areas, which continued to drive values of homes and lifestyle property up.

He added that longer term, the new Tauranga Northern Link would reduce commuting times to Te Puna, and noted that similar road improvements in the eastern corridor had led to significant property value increases in areas such as Paengaroa.

Nationwide property changes

- Nationwide, residential property values for March increased 12.9 per cent over the past year. Values rose by 0.6 per cent over the past three months, and the average value nationwide is $631,432.