The increase in Rotorua house prices during the past 12 months is almost three times the rate of neighbouring Tauranga homes.

The latest Quotable Value figures show Rotorua properties saw an increase of 7.2 per cent in the 12 months to May, with the average house value now sitting at $422,965.

And although an average Tauranga home sells for $700,744, properties saw a 2.6 per cent increase over the same period.

Simon Anderson, chief executive of Realty Services which operates Eves and Bayleys, said Rotorua was still enjoying a "stage" of the market.


"What we've seen over the last three or four years is a marker that has moved from Auckland to Tauranga and then on to Rotorua. It takes some time for both highs and lows to move from the big cities, out to the regions and then on to the provinces.

"Rotorua is still very much enjoying a high stage."

He said the local business community and Rotorua Lakes Council had been instrumental in ensuring there were strategies in place to attract people to Rotorua.

"Rotorua remains to be a good story.

"Where it sits in 12 months time remains to be seen - it could possibly ease off in the next 12 months - but if the council and the business community keep supporting growth and diversification, it will continue to be a good story."

Professionals McDowell Real Estate co-owner Steve Lovegrove said the Rotorua and Tauranga markets were quite different, largely due to urban development.

"In Tauranga, there is growth in urban development which allows for plenty of opportunities for new home buyers. While Lakes Council is processing consents as quickly as they can, the availability of new properties is contained within the existing properties – that's all we have to work with.

"Until we see massive urban growth, nothing will change."


He said Rotorua was experiencing population growth as more people realised the city was a great place to live and made the move.

"We're often hearing about people moving to the big cities but I dispute that. I believe people are making lifestyle choices – they want to get away from traffic, away from the hustle and bustle of big cities."

Lovegrove said an open home last week attracted 30 groups of buyers.

"In part it was due to great marketing but also the high pressure of demand.

"The total number of Rotorua properties available on internal websites is at an all-time low and it is a trend that is not going to get better in a hurry, in fact it's getting worse.

"This will continue to sustain above average price growth in the city."

LJ Hooker Rotorua principal Malcolm Forsyth said Rotorua's price increase compared with Tauranga's showed Rotorua had a lot more room to move and needed to move.

"There's no reason for a $300,000 price difference between the two cities and it is good to see the gap slowly, and I say slowly, becoming smaller."

However, he said the variation had resulted in people choosing to buy in Rotorua.

"If they can come here and buy the same sort of house that sells for $300,000 more in Tauranga and have that amount remain in the bank, why wouldn't they."

He had seen figures last week suggesting Rotorua had three times more buyers than listings.

"Listings have been quiet but activity remains high although I believe there may have been a small shift last week.

"The shift suggested there may be a little bit more happening in terms of listings and there is definitely a bit more happening in terms of appraisals."

He said it would be interesting to see what that meant for the near future.

Ray White Rotorua agent and business owner Anita Martelli said the price increase did not come as a surprise.

"We still have a shortage of property in terms of homes attracting multiple offers. I see everything as being very positive for Rotorua at the moment.

"People are wanting to come and live here, and locals are moving up in property size and value – the spread is across the board."

She said she couldn't see anything that would change that.