PHOTO: The Tauranga residential market performed strongly in 2021. FILE
Home values continue to climb ever higher in Tauranga – but there are increasing signs of a slow-down on the horizon.
The city’s average home value increased by 30.5 per cent in the 12 months of 2021, including 7.7 per cent in the three months leading into the Christmas and New Year holiday period. It is now sitting at precisely $1,173,369.
“The Tauranga residential market performed strongly in 2021 with high buyer confidence, continued low interest rates early in the year, and an economy which, despite the uncertainty created by Covid-19, is performing comparatively strongly,” says QV property consultant Derek Turnwald.
“The population of the city is growing rapidly and a large number of new dwellings was built on the periphery of the city, particularly in Pyes Pa and Papamoa.
“Changes to tax laws pertaining to property ownership – particularly for investors – and rising interest rates in the latter part of the year has dented that confidence in the market. Though properties continue to sell well and values continue to rise, the sentiment is that the residential market is likely to cool off in 2022.”
Turnwald says the number of open home attendees had already dropped off considerably.
“The market quietened down more than usual over the Christmas and New Year period. Bank lending continues to tighten and first-home buyers are finding it harder and harder to get lending approved. Mid-to-high value range properties continue to sell reasonably well, but the numbers of prospective buyers looking to purchase has decreased.”
The average home increased in value by 7.8 per cent nationally over the past three-month period to the end of December, up from the 6.9 per cent quarterly growth we saw in November, with the national average value now sitting at $1,053,315.
This represents an average annual increase of 28.4 per cent for 2021.
In the Auckland region, the average value now sits at $1,527,092, climbing 9.7 per cent over the last three-month period, with annual growth of 29.1 per cent, increasing from the 27.9 per cent QV reported in November.
“It is fair to say that 2021 was a pretty unusual year for the property market. Never in recent times have we had so much external intervention in a housing market and yet, in the midst of a global pandemic, the market grew by a record 28.4 per cent nationally,” says QV Operations Manager Paul McCorry.
“It became pretty clear towards the end of the year that this level of growth was not going to continue indefinitely as we started to see a decline in the quarterly rate of growth.”
Last month, QV reported that three quarters of the major urban areas we monitor were still seeing an increase in the rate of quarterly growth.
This time around, half are now showing a decline.
“To be clear, they are all still seeing values go up – but at a much slower pace.
“Of the other half that are still showing an increase in the rate of growth, five have increased by less than one per cent. The market has definitely pumped the brakes, but it hasn’t ground to a halt completely.”
McCorry says Christchurch City was the obvious winner of the unwanted ‘biggest increase’ title in 2021.
The Garden City saw values lift a staggering 40.2 per cent year on year, “a symptom of a market a little earlier in the growth cycle, where relatively speaking things were a little more affordable”.
In real terms, that means in January 2021 the average Christchurch house price was around $560,000; today it is $785,000.
Whilst the rate of growth has slipped a little this quarter, it is still in the double digits over a three-month period at 11.6 per cent.
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