You've bought your first home. Tick. But now circumstances mean you have to upgrade, perhaps your family is growing or you want to move to a better schooling area, where price tags for homes are higher. New OneRoof and Valocity figures show it is cheaper to enter the property market in some cities, but more expensive when it came to buying your second or third home. Take Rotorua and Tauranga for example. Two cities, under an hour's drive apart but with a huge difference in price. Property reporter Zoe Hunter looks into the data and talks to real estate agents as to why it is more expensive in one city to move up the property ladder.
It is more expensive to move up the property ladder in Rotorua than it is in Tauranga, according to new data.
Bay of Plenty real estate experts say that is because it was traditionally cheaper to get into Rotorua's property market than it was in Tauranga.
Figures from OneRoof and Valocity examined the median values and land size of properties bought by first-home buyers, investors and movers across New Zealand to see which locations offered the best value.
The data showed the current median value of properties bought by first-home buyers in Rotorua was $395,000.
However, the median value of homes bought by people trading up was $552,500 – a $157,500 price difference.
The price gap between a first and a second or third home in Tauranga was $115,000 in Tauranga.
OneRoof editor Owen Vaughan said the leap from first home to second home in Rotorua was one of the most expensive in the country.
However, he said the city offered buyer groups more value for money than found in the major cities.
The cost per square metre for first-home buyers in the city was $483 and $605 for movers compared with $1025 for first-home buyers and $1169 for movers in Tauranga.
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Vaughan said the big difference in the price of a first and second home in Rotorua was due to movers targeting bigger, better quality houses in higher value suburbs in the city.
"The high cost per square metre in Tauranga is due to the rapid escalation in prices during the property boom, and the demand for coastal property," he said.
The data showed the biggest competition facing first-home buyers was investors, with both groups targeting similarly priced and similarly sized properties.
Valocity's valuation director James Wilson said with investors increasingly sitting on the sidelines, first-home buyers were now able to plug gaps in the market.
However, Wilson said investors in Tauranga were finding it more expensive to grab properties than those entering the market.
"This appears to be a result of the fact that first-home buyers in these locations are targeting the very first rung on the ladder, which may be housing stock that needs improvements or may have smaller layouts such as one or two bedrooms," he said.
"Whereas investors in these areas are seeking to maximise returns by targeting higher value property in more desirable locations."
Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said Rotorua's market was traditionally easier to enter for first-home buyers.
"That is why we have seen a number of people commuting from Rotorua to Tauranga," he said.
"There is also a lot more rental properties in Rotorua, where first-home buyers are buying."
Anderson said there was more choice for second-home buyers in Tauranga where there was more development compared with Rotorua.
Tremains Real Estate Rotorua manager Malcolm Forsyth said the data showed Rotorua represented good value for money and it was easier to get on to the city's property ladder.
"That $300,000 to $500,000 price bracket is making up probably about 50 to 60 per cent of the market. There has never been a better time to buy."