Rotorua reached a new median house price record of $650,000. Photo / Getty Images
Agents say a sudden rush of property sales in Rotorua last month reflected efforts to get deals over the line before big changes to Government housing policy kicked in.
The number of properties sold skyrocketed in March - including more than a dozen over the $1 million mark - driving the city to a new record median house price of $650,000.
The latest Real Estate Institute of New Zealand figures show the city had 114 sales last month compared to 78 in February and 82 in March last year, when New Zealand went lockdown.
The median price was up 5.3 per cent in a month, from $617,000 in February, and a whopping 35.4 per cent from the $480,000 median a year ago.
Rotorua's REINZ spokeswoman and First National principal Ann Crossley put the rush in sales volumes down to the Government's housing plan changes being "clearly heralded".
People wanted to get in before the bright-line test doubled from five to 10 years, she said. The change means any gains on a residential property that was not the family home will be taxed if the property is sold within 10 years of purchase.
"People just got in is what this shows us."
Crossley said there were at least a dozen or more sales across all price brackets including 17 properties over $1 million sold last month.
That included lifestyle and dairy property, she said.
Crossley said there was a "real mix" of buyers including people buying first homes, owner-occupiers downsizing and investors.
"What we did notice with the listings was people were realising they need to be able to sell to buy. But they are not prepared to sell unless they had something they could buy.
"It's really the only way. Unless they have got the capability to still own and buy something else unconditional if they want to buy something else they have got to sell.
"It's a good idea to put some protections in place but it does slow things down. There's got to be a balance."
Rotorua Professionals McDowell Real Estate co-owner Steve Lovegrove said when he first arrived at Rotorua $650,000 would buy a nice property on a two-acre lifestyle block.
"Now it gets you an average house in town," he said. "In six years what your money can buy you is a lot less."
Lovegrove said there was a rush of sales after the Government announcement and he believed it was people moving to Rotorua for the lifestyle that was driving up the prices.
Just this week, a property expected to sell in the $700,000 price bracket had 13 offers and the bulk of buyers were out of towners wanting to move to Rotorua, he said.
Buyers were writing similar "plea stories" about wanting to move to the city, he said.
Lovegrove said rental properties were now being snapped up by first-home buyers.
"I think Rotorua is shifting from typically a rental area to a first-home buyer one. We are seeing that demographic of Rotorua migrate slowly."
Lovegrove said million-dollar properties weren't on the market for long and he was calling it the "mansion effect", which saw investors sell their homes and investment properties for something bigger.
He hoped the rise in house prices would give people the confidence to invest in developing property so the city can expand its portfolio.
"We need investment in building."
Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson said people were still seeing value in Rotorua.
"There's been a number of very good sales around the lakes as people with a lot of cash look for those prime investments."
Tremains sales manager Megan Davies said the rise in prices reflected the type of property coming to the market and not the average house value.
"This time last year ahead of new more stringent regulations around rental property standards, investors will be getting rid of excess stock.
"This year they are re-evaluating and if they have held it for less than five years they are looking at the impact of the bright-line test."
Davies said a significant number of owners were considering selling a rental property or lower value home, only to withdraw because of the bright-line.
"If anything the move to 10-year holding of investment properties will impact stock further and reduce the number of homes available in the lower range for first-home buyers."
Davies said March was a "great" month with 33 per cent of sales sold under the hammer.
"The auction method is taking hold in the city and we are excited to see so many cash buyers making decisions. Preparedness pays off when competing in a tight stock arena."
Harcourts Rotorua sales manager Michelle Matthews said the new median price record was a "fantastic result" and reflected continued confidence in the city's market.
"Buyer demand has been unprecedented taking advantage of low-interest rates."
Matthews said sales were across all sectors, including first-home buyers and investors looking to secure property across all suburbs.
"Vendor confidence has meant an increase in auction activity, a process which invites competitive bidding and can result in exceptional prices.
"With the overriding shortage of stock, there is likely to be continued pressure on prices."
Median prices across the region climbed 24.5 per cent year-on-year to $822,000 from $660,000 in March 2020 - but dropped 3.1 per cent to $822,000 from $848,250 in February.
Tauranga's median house price also dropped 0.4 per cent to $901,000 from $905,000 in February despite skyrocketing 23.4 per cent year-on-year from $730,000 in March 2020.
But sales volumes were high in Tauranga, with 295 house sold in March compared to 273 in February and 255 in March 2020.
REINZ regional director Neville Falconer said supply levels continued to be an issue for the region.
There was a 7.8 per cent drop in new listings from the same time last year and a 32.9 per cent decrease in available stock, leaving just seven weeks of available inventory.
"Low levels of stock and high levels of demand have resulted in strong competition for good properties."
Therefore, the median number of days to sell have dropped four days from the same time last year to 28 days, the lowest level for a March month on record.
Falconer said auctions continued to be a popular method of sale for the region, with 47 per cent of all sales being completed by auction, up from 19 per cent at the same time last year.
"However, access to finance is becoming harder for some buyers as banks continue to
place conditions on buyers."
March property statistics
Rotorua- median price
March 2021: $650,000
February 2021: $617,000
March 2020: $480,000
Rotorua- volume sold
March 2021: 114
February 2021: 78
March 2020: 82
Tauranga - median price
March 2021: $901,000
February 2021: $905,000
March 2020: $730,000
Tauranga - volume sold
March 2021: 295
February 2021: 273
March 2020: 255
Source: REINZ
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