Rotorua has gained its first million-dollar metro suburb. Photo / Stephen Parker
Rotorua has gained its first million-dollar metro suburb as property values "surge" across the city, new data shows.
The latest report from OneRoof and its data partner Valocity showed Rotorua's property values grew 5.6 per cent in the past three months.
The city's average property value was now just shy of hitting $800,000, almost double what it was five years ago.
OneRoof editor Owen Vaughan said eight Rotorua suburbs jumped more than 5 per cent in value over the quarter.
Vaughan said Lynmore had the city's highest rise in values, climbing 8.1 per cent.
"The surge also pushed Lynmore's average property value across the $1m mark, making it Rotorua's first $1m metro suburb."
He defined a metro suburb as residential, without lake views or lifestyle blocks.
Rotorua was keeping the Bay of Plenty "out of negative territory" as growth across the region slowed to 1.1 per cent in the past three months.
Vaughan said Ōpōtiki was bearing the brunt of the market slowdown in the region, with the average property value falling 2.4 per cent ($15,000) to $617,000 in the past three months.
"Also feeling the squeeze is Tauranga, where the average property slid 0.2 per cent to $1.237m over the same period.
"Growth in Whakatane, Western Bay of Plenty and Kawerau was positive, but at a rate of around 1 per cent."
Rotorua Professionals McDowell Real Estate principal Steve Lovegrove said there was not a lot happening in the first-home buyer and investor market as it was trickier to borrow from the banks.
"There is price adjustment and we are seeing a reduction in the willingness of what buyers are willing or capable of paying."
But, he said, there was reasonably consistent activity among second or third-home buyers who were already on the property ladder and Lynmore properties fit that demographic.
Lynmore was a "well-rounded" suburb that had views, forests and good schools.
"It is not surprising it is becoming our premium top-end suburb.
"You will soon see other elevated areas around the city follow suit very quickly."
That included metro suburbs such as Matipo Heights and the upper reaches of Owhata, he said.
First National principal and Rotorua Real Estate Institute of New Zealand spokeswoman Ann Crossley said a lot of "young property" had sold in Lynmore for more than $1m, which had bumped up the average value.
"That is where a lot of the activity has been and it is also where the growth has been. We did not have those properties available to sell before."
Crossley said the number of sales across Rotorua and Tauranga had dropped and properties were spending more time on the market.
However, she said the impact on Rotorua's property market was less exaggerated because it did not "boom as much" as Tauranga's did.
"It is a bit of a market correction. It is a readjustment."
Ray White Rotorua business owner and principal Jacqueline O'Sullivan said Lynmore had always been a sought-after suburb.
Young families were attracted to Lynmore Primary and mountain biking enthusiasts wanted to be close to the Redwoods, she said.
O'Sullivan said Rotorua and the Bay of Plenty had become a lifestyle choice.
"The poor cousin of Tauranga has now caught up in terms of real estate prices."
Property Brokers regional manager for the Bay of Plenty, Simon Short, said there was a migration of movement between provincial New Zealand as inflation and interest rates rise.
"Places like Rotorua are starting to get that benefit of buyers looking elsewhere."
Short said rising values across Rotorua, especially Lynmore, proved there was ultimately confidence in that market.
However, sales volumes and buyer activity had dropped across the market amid a significant jump in listings.
"It means buyers have more to choose from and the ability to play the waiting game."
Independent economist Tony Alexander said he expected to see property prices falling "pretty much everywhere" eventually.
"My expectation for the regions which are still showing increases, [is] there are still decreases that are likely to come along as buyers back away all around the country."
Alexander said generally Bay of Plenty and Waikato had seen strong price gains since about 2015 and were due for a "bit of a correction".
"The extent of the correction just increased because of the pandemic surge in prices everywhere.
"I don't think people should be surprised if there are falling prices in some areas at the moment and rising prices in others, where there is probably a bit of catch-up."
It did mean first-home buyers may eventually be able to enter the market at better prices than last year, he said.
"The trick, of course, is figuring out when you get back into the market. My advice is to try not to get too focused on trying to pick the bottom in the market.
"Instead, focus on the fact that more properties are coming onto the market, so there is more to choose from and a greater chance a person is going to find what they want to suit their needs.
"I would focus on the improving choice, rather than trying to time the bottom of the cycle."