The latest Valocity data has been released. Photo / Felix Desmarais
The average values of residential properties in Tauranga have fallen 4.2 per cent compared to one year ago while the number of sales dropped by 15 per cent, new figures show.
Rotorua average values had remained almost the same but its sale volumes had plummeted by 34 per cent.
Data from the Valocity Value Index revealed the average value of a house in Tauranga was $1,090,000 compared to $1.142m 12 months ago while Rotorua remained stable at $736,000, down $3000.
Western Bay of Plenty dropped 3.5 per cent from $1.15m to $1.123m over the same timeframe while in the Bay of Plenty, Kawerau had the biggest hit, falling from $442,000 to $389,000 – about 12 per cent.
Valocity global head of real estate Helen O’Sullivan said persistently high-interest rates and the uncertainty of a general election hung over the market throughout 2023.
“We saw prices begin to turn around the third quarter of the year, but transaction volumes remained lower than 2022 throughout the Bay of Plenty and the New Zealand market generally. Interest rates made the market especially challenging for investors, who were conspicuous by their absence amongst the transactions that did occur.
“The impact of this in volume numbers is particularly noticeable in Rotorua, where transaction volumes are down by almost a third on last year.”
She said relative interest rate stability coupled with lower levels of activity by investors would make space in the market for first-home buyers and those trading up or down.
“We expect these groups to be the main determinant of direction in the property market in 2024.”
Chief executive officer of The Realty Group, which operates Eves and Bayleys, Heath Young said its biggest sales this year were two $7m-plus properties including one at Mount Maunganui on Marine Parade and the other in the Rotorua Lakes area.
The vendors and purchasers had requested confidentiality on the sales, Young said.
Sales volumes for Tauranga and Rotorua had been fairly consistent this year compared to 2022.
Interest rates had an impact on the housing market. Affordability and access to credit was a key factor when getting deals together for vendors and purchasers, he said.
“While this has had an impact on pricing, volumes and the time taken to close deals, the deals are absolutely still happening and there has been a significant upsurge in market activity since the election.”
Young said he was relatively confident that the property market through 2024 would steadily improve through each quarter.
Bryn Parry from iSellProperty in Rotorua said prices had continued to drop in 2023 and only stabilised in the last few months. The volume of its sales were down about 10 per cent on 2022.
Higher interest rates have had an effect on all price brackets and was most noticeable on houses above $700,000.
Its highest sale was $1,055,000 in Ngongotaha.
The majority of transactions had been homeowners, first-home buyers entering the market and families upgrading to bigger homes. There has been very little activity from investors.
“My view is prices will remain stable at the current level. I feel that sales volume will increase.
“Now is a great time to buy a home, it is unlikely that prices will drop any lower this property cycle plus there are plenty of choices for buyers.”
Rochelle Carter from Ray White Pukehina said 2023 had been a “patchy year full of uncertainty for buyers”.
“I have seen more activity in the high end as generally these buyers do not require finance and can make a decision.”
In November she sold a property on Pukehina Parade for $3,190,000 to a buyer who moved from Auckland.
“There is a broad range of buyers in the market, at present mainly middle-aged investors looking to buy as retirement investments. The first-home buyers have been very quiet this year due to high interest rates and lending restrictions.
Higher interest rates had definitely affected the property market.
“Finance is difficult to obtain, I have had quite a few property sales fall over due to finance this year, it is very common for buyers to think they will not have a problem obtaining finance but their lender doesn’t agree with them.”
“I think we can now unfasten our seatbelts as 2024 will return to a FOMO (Fear-of-Missing-Out market.”
Ray White Rotorua business owner and principal Jacqueline O’Sullivan said it had seen a reduction in house prices ranging between $50,000 to $90,000 throughout the year with numbers of sales jumping from a lot higher in some months last year to a lot lower in other months.
“It’s been very erratic.”
Its biggest sale was in Lake Tarawera $1,445,000 followed by a property in Lynmore which sold for $1,196,191.80.
She said at the start of 2023 right into winter the numbers at open homes were minimal.
“Going into spring and with the confidence that we were going to have a new Government, activity started increasing with open homes becoming busier. Some investors are back and multi offers are happening again.
“Popular locations such as Springfield and Lynmore are still attracting lots of interest from buyers.”
Moving into next year she felt optimistic.
“We are going back to more activity, stable prices, and in some areas with the huge net migration we are having this year, this might put pressure on existing properties and drive prices back up. The rule of supply and demand will apply and unless housing supply magically produces thousands of new homes the real estate market will respond the way it did in 2020/2021.”
Tremains Bay of Plenty managing director Anton Jones said it would be “interesting” to see how the property market goes in 2024.
“It’s not going to be a boom it could be the same or slightly better.”
He agreed 2023 was a tough year due to rising interest rates and “people tightening their belts”.
Last month ANZ dropped its two-year fixed term mortgage rate by 20 basis points to 7.49 per cent and its three-year fixed term rate by 14 basis points to 7.35 per cent, while its special mortgage rates will see a 20-basis-point cut on the two-year rate to 6.89 per cent and 14-basis-point cut on its three-year rate to 6.75 per cent.
An ANZ spokeswoman said it had seen reductions in longer-term wholesale rates recently, which it had considered as part of its change to both term deposits and home loans.
Meanwhile, ASB’s economists have brought forward their forecast for the first OCR cut to August 2024, six months earlier than their previous view.
The Reserve Bank of New Zealand left the official cash rate unchanged at 5.5 per cent on November 29 and warned that inflation remained too high and monetary policy would remain restrictive.
- Sources: Real estate agents
Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.
Police say they are following lines of inquiry to catch the offender.