Construction of a subdivision designed to give first-home buyers a new three-bedroom house for $450,000 is three weeks away from starting after an almost two-year wait.

The Kawaha Point Villas project was set back when it was discovered a drain which ran along the southwest boundary cut across the corner of the subdivision and needed a pipe put in before the council could issue the consent.

Putting in the pipe also required an easement to be added, resulting in the redesign of the area and cutting three properties from the original 29-house plan.

But FHB Group managing director Rob Davies said while he was still waiting on the final consents to go through, he planned to begin work in the next three weeks.

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While it was a relief the work was finally about to begin, his biggest concern was the people who had bought the properties.

"A lot of them jumped on board when we first got started back in 2017 and they've just been waiting patiently for their houses to be built."

He said the positive was that the nearly two-year wait meant the value of the properties had increased to nearly $500,000.

He said the extra equity was something that would hopefully make the wait worthwhile for the buyers.

Meanwhile, real estate agents are calling for more subdivisions in the city to ease the housing situation.

Professionals McDowell Real Estate co-owner Steve Lovegrove said the population growth took the city by surprise and it showed in housing prices.

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The latest Quotable Value figures showed the average property value in Rotorua was $444,910, up 6.6 per cent on last year's average of $417,258.

Lovegrove said the population growth showed the city had become a more attractive place for people to live, but the increase raised the property value due to demand.

Lovegrove said agents had no issue finding people who wanted to build, but it was a matter of land availability.

"From a real estate point of view, I would love to see more subdivisions," he said.

He said it was good to see urban expansion in the district and subdivisions reflected confidence from developers in Rotorua when previously they would have been nervous to invest in such a large-scale project.

First National Rotorua principal Ann Crossley said the requirements needed before subdivisions were built had become stricter since the Christchurch earthquakes.

She said Rotorua was desperately short on housing and the city "definitely" did not have enough subdivisions.

OneRoof editor Owen Vaughan said a key factor in the popularity of Rotorua was the relative affordability of homes here compared to those in nearby Tauranga and Hamilton.

Vaughan said this demand was clear in the surge in property prices in the past year.

"Pressure in the market will undoubtedly trigger new subdivisions and development - the demand is clearly evident - and I suspect that the frustrations being felt now will lessen over time."

Rotorua Lakes Council's operations group manager Henry Weston said Rotorua needed more houses and the council was keen to encourage affordable housing to be considered in the mix.

Weston said while issues which caused delays to builds were frustrating, the council had a responsibility to meet critical legislated requirements.

"Sometimes there are issues that challenge engineering solutions and take time to work through," Weston said.

"We always endeavour to make the process as problem-free as possible."