Rotorua's median house price reaches record high of $700k as new challenge faces buyers

The median house price in Rotorua has risen to a record $700,000. Photo / Andrew Warner

Rotorua's property market is being held up by higher-end sales as the city's median house price reaches a record $700,000, agents say.

And they also warn new lending rules may continue to prove challenging for first and second-home buyers.

The Real Estate Institute of New Zealand (REINZ) Monthly Property Report for December was released yesterday and shows Bay of Plenty region experiencing record high median house prices, particularly in Rotorua.

The median price was up 2.9 per cent from November and 29.6 per cent from a year ago — the median price in December 2020 was $540,000.

Regional prices increased 27.8 per cent from $720,000 to $920,000 — also a new record median high.

Realty Group, which operates Eves and Bayleys, managing director Simon Anderson said Rotorua's market was diverse with the high end going strong.

Realty Group, which operates Eves and Bayleys, managing director Simon Anderson. Photo / Andrew Warner

"We have sold some record sales in the Lakes area. The top end has really taken off, which is accentuating the median price."

However, he said there had been some incredible growth in the first home buyer and rental market because of lack of supply.

Anderson said there were not many suburbs left with a median house price of under $500,000, which showed high interest in the lower end of the market being driven by local business growth and people willing to move further afield to get on to the property ladder.

The number of properties sold last month was down compared with December 2020 - 72 from 124 - but Anderson said there was a big price difference from $540,000 to the record $700,000.

He said the top end of the market was expected to remain strong but there would be challenges with borrowing from the banks for first and second-home buyers.

"That's causing some level of concern in that market but overall, we are going to come out into a really strong market in the early months of this year.

"There is good stock on the market which will become available over the next six to eight weeks."

Rotorua Professionals McDowell Real Estate co-owner Steve Lovegrove said the market was great for homeowners but was "daunting" for those entering it.

Rotorua Professionals McDowell Real Estate co-owner Steve Lovegrove

"It can only be described as phenomenal, really," he said, in reference to the record.

He believed the market was affected by property owners such as investors not selling up due to the bright-line property rule, which could mean paying income tax on profit if the property was purchased within certain timeframes.

"The mix of property types has changed … there's an amplification of middle to high end now."

He said about five or six years ago the mix of properties would have been 75 per cent entry-level.

"It's swapped around."

In future, he said there were three things that would affect buyer confidence: Cost of finance, access to finance, and cost of living.

He said it was hard to tell if there was already an impact.

First National principal Ann Crossley said while house prices, in general, were on the up, the median house price for the district was skewed by 10 residential million-dollar listings.

Among them was a lakeside property that sold for $1.8 million.

In contrast, there were only seven sales under $500,000.

She commented that December was typically busy for about two weeks but a combination of the latest Covid-19 lockdown and finance uncertainties meant it had been quiet.

"The criteria is hitting everyone. A lot of people who had pre-applications had them pulled."

REINZ regional director Neville Falconer said he felt the market slowed earlier than usual last month.

"Attendance at open homes dropped noticeably in mid-November rather than mid-December, which saw activity in the market ease — in some cases due to existing finance agreements being pulled altogether."

REINZ regional director Neville Falconer. Photo / Supplied

As a result, properties were spending longer on the market, with the days to sell up from 27 days in December 2020 to 30 days in December 2021.

"However, this increase in days to sell is relatively minimal and indications are that the market remains strong notwithstanding the uplift in median days to sell."

He explained the number of new listings increased in the region, and inventory levels were slowly replenishing after the Covid-19 lockdowns of 2021.

The report states the trend in median price had been increasing for several years, strongly so over the past year.

It states the sales volume trend has started to dip and the days to sell median has stabilised over the past few months.

The House Price Index was the fifth strongest performing region over the past 12 months.