Rotorua's average property value has cracked $600,000 for the first time. Photo / File
Rotorua's average property value has cracked $600,000 for the first time. Photo / File
More houses are "desperately" needed as drastically small supply sees Rotorua hitting a property value record.
Mortgage investors made up nearly a third of the sales in January with the loan-to-value restrictions to help slow down the rapid growth.
CoreLogic NZ's latest House Price Index showed property values shot up104.7 per cent in Rotorua since 2007, bringing the average value to $601,151, up from $595,638 in the last quarter.
The average is found through CoreLogic's house price index process which reflects the value of the entire stock in an area, as opposed to what has sold at any point in time.
It rose 9.7 per cent in the last three months, and 20.2 per cent over one year.
This was after it rose 8.8 per cent from $547,473 in Q3 between Q4 from last year.
Six years ago, Rotorua Property Investors Association president Debbie Van Den Broek would sell a three-bedroom house in Western Heights for $180,000, now, she would sell the same kind of house for $500,000.
She said it was a lot of money considering the standard of some of the homes.
"Tauranga's got beautiful homes, Taupō's got beautiful homes, but Rotorua has a great mass of very average homes."
Rotorua Property Investors Association president Debbie Van Den Broek. Photo / File
She said the price range between the top and lower-end of the market was getting smaller, and the rising prices made the market more difficult for people to get into.
"You've got to have a deposit, and the faster it rises, you can't save fast enough ... especially when banks are requiring a faster deposit."
As a result, more people were buying houses with family or friends.
"It's crazy at the moment, and the craziness will stop. It can't go up forever," she said.
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Six years ago one buyer would have gone through five open homes, however last weekend, 120 buyers came through the same number of viewings, Professionals McDowell Real Estate co-owner Steve Lovegrove said.
"There's less than 200 properties available on the market, and if you go back six years, there would've typically been 1000 properties for sale ... we've had a complete turnaround."
Those looking to buy had about one-fifth of the choices they would've had six years ago, he said.
More people than houses were an issue at "every end of the spectrum," he said, from the $1 million-plus market to the entry-level end of the market.
Professionals McDowell Real Estate co-owner Steve Lovegrove. Photo / File
"We desperately need new stock ... it's only an abundant supply that will balance out the current demand, that will soften the price pressure."
He said more people moved to Rotorua over recent years with the lifestyle attracting out-of-towners from stronger housing markets.
"If people are coming to the city, we need to make sure we have jobs, homes and infrastructure for those people, but it's no quick-fix."
Rotorua Budget Advisory Service manager Pakanui Tuhura said rising house prices meant rent rose, too.
He said most of their clients either already owned their home and were trying to pay off their mortgage after job losses or salary cuts, or they rented.
"Due to the growing shortage of rental properties, some landlords are charging inappropriate rents because demand is outstripping supply at the moment.
Earlier this week, he said decent and affordable rent was near impossible to come by, and those who could previously afford their rents were struggling.
Rotorua Budget Advisory Service manager Pakanui Tuhura. Photo / File
The median weekly rent in Rotorua in December jumped to $460, increasing on the same month last year from $430, and $370 the year before - an increase of 24 per cent over two years, according to Trademe's latest data.
CoreLogic head of research Nick Goodall said short supply in the region combined with strong demand - enabled by low-interest rates - lead to the strong growth.
Mortgaged investors picked up 32 per cent of sales in Q4 last year which was the largest share since Q3 in 2016.
"Some of this activity will be buyers 'getting in' before the formal re-introduction of LVR (loan-to-value) restrictions on March 1.
Goodall believed LVR restrictions may increase from the proposed 30 per cent deposit requirement for investors to 40 per cent, which would ease the value growth.
"Rotorua is not as reliant on international tourists as much as many people think, which has meant it has fared much better than expectations with our borders closed."
CoreLogic NZ head of research Nick Goodall. Photo / File
