Rotorua house prices surging ahead

Low interest rates and tight post-earthquake supply had contributed to an acceleration in house price increases. Photo / Paul Estcourt

A sudden spurt of growth in Rotorua's residential property market has pushed it well ahead of other provincial centres, new figures show.

The latest QV New Zealand Herald Property Report shows the average house sale price in the Rotorua district rose by 1.8 per cent between April and July to $273,424, while Auckland region prices jumped 4.1 per cent to $644,973.

Rotorua recorded the biggest North Island jump in house prices outside of Auckland.

McDowell Professionals real estate agent Ian McDowell said the buoyant figures might have been driven by a number of sales in the higher price-bracket, with buyers wanting to purchase in case Reserve Bank interest rates rose.

"We've had a number of first home buyers but we've also had people who've been sitting on the fence for some time and have decided to make a decision and move.

"I think people have held back for a long time, Rotorua's been depressed for five years or so.

"They can see it starting to move in that range so [think it's] better to get into it and buy now because prices will go up."

Mr McDowell said Rotorua's "up and down" sales figures did not reflect a trend of ongoing growth in the market.

"It's pretty frustrating really.

"In reality the sales for the first six months of this year were exactly the same as the first six months of last year."

The cheapest area to buy a house in Rotorua for the quarter ending June 30 was Fordlands, with a median house price of $123,500, while the most expensive area was Lynmore at $387,000.

Mr McDowell said most Fordlands buyers were investors looking for a good return.

In contrast, Lynmore was attracting businesspeople looking to get into the market before interest rates rose, and was the area pushing up the recent average sale prices.

The average asking price for Bay of Plenty increased 3 per cent during August to $441,864, according to realestate.co.nz.

Real Estate Institute of New Zealand chief executive Helen O'Sullivan said the regional markets were starting to reflect some of Auckland and Christchurch's rising prices, but not to the same degree.

"Some areas, in particular the regional areas, are still some distance away from that level of activity and in fact away from their 2007 peak.

"The housing market outside of Auckland and Christchurch is ticking along and doing ok, but I wouldn't call any of the markets outside of those two areas overheated."

Imminent Reserve Bank lending restrictions, which will limit lending on home loan deposits less than 20 per cent, should not have been applied nationwide, she said.

"It's creating, potentially, a barrier for people outside [Auckland and Christchurch] and based on the state of the market probably isn't really necessary."

The Property Report showed the most expensive suburbs in New Zealand were all in Auckland, with average prices ranging between $1.2 million and $1.7 million for a property on the city centre fringe.