Rotorua property values enjoy 25 per cent rise

Rotorua property prices are now 20.7 per cent above the 2007 market peak. Photo / Ben Fraser

Property values in Rotorua have continued to skyrocket, with latest figures showing values have jumped 25 per cent in the last 12 months.

However, new Loan to Value Ratio restrictions are being cited as the possible reason for a decrease in investor interest.

The QV residential property value index for September, released today at midday, showed the big increase.

The average current value of a residential property in Rotorua is now $354,278 which is 8.1 per cent higher than three months ago.

Property values now sit 20.7 per cent above the 2007 market peak.

First National principal Ann Crossley said there had been a drop in investor interest, attributing that to new Loan to Value Ratio restrictions.

The restrictions mean most property investors will need a deposit of at least 40 per cent from the start of October.

"We are still getting multiple offers on each property but with less investor competition, it could mean the market is more open to first-home buyers.

"Other than the dip in investors, there is nothing to suggest anything else will change. This growth period has sustained for about 12 months and I predict it will continue to do so."

She said another notable difference was Rotorua had not had its normal "spring lift" in house listings.

"Historically people would wait for spring to sell their homes because it is when they look best but because the market has been so active, we haven't seen that usual lift."

Professionals McDowell Real Estate Rotorua principal Steve Lovegrove said he had noticed a slowing down of activity and listings but expected that to pick up again this month and next.

"There has been a cooling off by investing buyers but I do suspect that will only be short lived.

"I predict we will come back for a busy October and November and see a bit of a rush in the lead-up to Christmas."

Mr Lovegrove said the population growth and demand would continue to put pressure on the local market.

Ross Stanway, chief executive of Eves and Bayleys Real Estate, said the figures continued to be good news for Rotorua and its property market.

"The percentage increase Rotorua is seeing is right up there with Tauranga, Hamilton and even Wellington so it's very good news for people wanting or needing to sell their property."

He said despite the increase in values, Rotorua was still good value for money.

"As a result of people recognising the good value for money Rotorua offers, we are seeing a lot of attention swing towards the city - much of that still coming from outside the region."

Mr Stanway agreed that some investors would be affected by the new bank restrictions, but not all.

"Those investors who are borrowing heavily to buy properties will be affected but investors with good equity will continue to show interest in the Rotorua market."