CoreLogic: Rotorua's average property value nears $600,000

CoreLogic says Rotorua's average property value is almost $600,000. Photo / Getty Images

Rotorua's average property value has climbed to almost $600,000, as the city records its highest value growth in five years.

Real estate agents were working through the holiday period to help ease some of the "spectacular" demand for property and a "pre-Christmas rush" in December.

Home values in Rotorua jumped nearly $50,000 in the last three months of 2020. The city's average property value was now $595,638.

CoreLogic NZ's latest House Price Index showed Rotorua's quarterly growth rate climbed 8.8 per cent from $547,473 the previous quarter.

It is the strongest quarterly growth since August 2016 when values rose 9.3 per cent to $347,966.

CoreLogic NZ head of research Nick Goodall said the growth reflected the persistent demand for the area, with multiple property owners making up 43 per cent of sales in the last quarter of 2020.

First-home buyers also remained active despite a slight dip in activity to 23 per cent in the last quarter of 2020 compared to 28 per cent in the previous quarter, he said.

"One thing that might surprise with Rotorua is that it's not as reliant on international tourism as many think."

CoreLogic NZ head of research Nick Goodall. Photo / Supplied

According to the latest data from the Ministry of Business, Innovation and Employment, 40 per cent of tourism spending in Rotorua was from international tourists and 60 per cent local.

"So with the borders being shut, Rotorua hasn't been as exposed. Add in the lift in domestic tourism and it helps explain some of the resilience in the Rotorua economy," Goodall said.

"Furthermore the economy will have held up well with strong local industries such as forestry (and to a lesser degree agriculture) not suffering as much as others through the pandemic."

Harcourts Rotorua sales manager Colville Barbour. Photo / Supplied

Harcourts Rotorua sales manager Colville Barbour said the city's new property average reflected the high demand for property from both out-of-towners and locals.

"We've certainly been very busy."

Barbour said December sales were "spectacular".

"We did what we would normally do in five weeks in three weeks. Our sales flooded in. There was certainly a pre-Christmas rush."

His team had been working through the holiday break.

"Last holidays we didn't have any contracts. It's busier than it was this time last year."

Professionals McDowell Real Estate co-owner Steve Lovegrove. Photo / File

Professionals McDowell Real Estate co-owner Steve Lovegrove moved to Rotorua from Auckland five years ago.

"I have to confess, the very reason we moved to Rotorua five years ago was we knew the position of Rotorua's property market couldn't stay the same. It had to come under pressure at some point."

But he said he didn't expect property values to grow as much as they had.

"I thought we had sacrificed capital gain when we moved from Auckland five years ago but clearly we didn't. Now we've got the benefit of value growth and the lifestyle."

Lovegrove said it was predicted years ago that Rotorua would grow but in the last five years the city's growth had caught everyone by surprise.

He said it was scary to think the rise in house prices could make the town less affordable for those who have lived there for years.

"We've either got to accept that prices are going up or we've got to expand development so we can accommodate us all."

Rotorua had always been a strong local tourism market place, he said. "I wonder whether the truth has now come out that local tourism is a much more powerful spend."

Lovegrove said Rotorua was a city that was beginning to progress and still had plenty of growth potential.

"Rotorua can become a real jewel of a city in the North Island."

First National principal and Rotorua Real Estate Institute of New Zealand spokeswoman Ann Crossley said hearing the city's average property value was approaching $600,000 was "scary".

"I think there's quite a lot of activity at the top end, which will make your averages more skewed.

"But when you think two-bedroom units in the central city are selling for half a million, you go, 'Oh my goodness', whereas $500,000 doesn't sound as bad.

"It's really good for people who are selling but difficult for people who are buying ... and it's not going to change. As cliche as it is, buying today is better than buying tomorrow."

First National principal and Rotorua Real Estate Institute of New Zealand spokeswoman, Ann Crossley. Photo / File

Crossley said there was a lot of investor activity in the last quarter of 2020 and her team had been busy through the summer break.

One home was on the market for barely 24 hours and had 16 emails from potential buyers, she said.

"If they didn't have a property advertised during the break, they probably got to have a break. But if they did, they probably didn't get one."

Rotorua sales manager Megan Davies. Photo / Supplied

Tremains Rotorua sales manager Megan Davies said it was not surprising that before the year ended and post-election there was a flurry of activity leading to more competition and higher prices.

Davies said multiple property owners were certainly making up a large share of sales because they do not need to sell to buy.

"If buying investment property they do not face the same blockade of the vendor needing to purchase again.

"There is some gain still to be made in buying surplus stock and completing the Healthy Homes and new Tenancy Regulations work, but we do see vendors being selective and avoiding Brightline tax by holding their purchases for longer."

OneRoof editor Owen Vaughan. Photo / File

OneRoof editor Owen Vaughan said the city's value growth was fuelled by first-home buyers and investors deciding to buy at the end of the year.

"Those people who waited after Covid-19 struck are now in the market. That could be a result of the fact they've sold and are securing a place, or having money sitting in the bank. It all adds to the heat of the market."