Western Bay coastal house prices soar

Coastal property prices in the Western Bay jumped nearly $30,000 over the past year, a new property report reveals.

The monthly Real Estate Institute of New Zealand (REINZ) report showed the median house price in Mt Maunganui/Papamoa jumped to $425,000 last month, up from $396,500 in March 2012.

This was a slight fall on the previous month when the median price peaked at $432,000.

Meanwhile, the median price in Tauranga edged higher during the 12-month period, to $347,000. Sales volumes had also increased.

Financial Independence mortgage adviser Alan Hitchcock said first-time home buyers were struggling with increasing prices.

"It is starting to stretch to the maximum end for a lot of people, especially where people are getting into the new home market."

According to Stats NZ, the median income in Tauranga City was $65,300.

Mr Hitchcock said: "Younger people on a lower income are getting in with a minimal deposit of five or 10 per cent, so they have a reasonably hefty amount of debt."

Savings made through the KiwiSaver scheme had also boosted the local property market. "There are some people coming out with about $12,000 to $15,000 cash [from the scheme], as well as getting the Government grant of between $3000 and $5000 - which is actually giving them quite a good lump toward buying their first home," Mr Hitchcock said.

"It's creating another little bit of a bubble which is happening."

Ross Stanway, chief executive of Realty Services, which operates Bayleys and Eves, said he had noticed an increase in sales.

"The volume increase has been something that has been evident and building for some time. Those volumes now are probably getting to a level where they are starting to influence prices."

Sales were starting to play a part but Mr Stanway said the sale of a small number of top-end houses could easily skew the median price.

The Western Bay has had a stable market for some time but as the demand for houses surpassed the number of properties on the market the price would be pushed up. "I think it's a good thing that we've had a good stable market. It's unlikely that we're going to see anything that's approaching the Auckland market."

Mount Maunganui LJ Hooker owner John O'Donnell said the volume of sales was up considerably but he was more sceptical about the increase in median house prices. "What we're actually really seeing is more expensive properties starting to sell. I can't necessarily agree that the prices are going up at all."

Mr O'Donnell said more houses were being sold but less properties were being listed.

"The reason we're selling more now is we're catching up on the last four years." People are rushing to take advantage of low interest rates now as indicators start to suggest rates may soon go up.

LJ Hooker Tauranga franchise owner Neville Falconer said the 163 sales in Tauranga in March was the highest number for the area since May 2007.

The median house price dropped below the same time last year but should not be seen as a reflection of the market.

"The median has dropped. That's not talking so much about the sales values as the part of the market which is active. The part of the market that's moving is the first-home buyers and investors. Prices aren't really dropping.

"It's certainly not bad news for homeowners and home buyers. There are good opportunities for first-home buyers in Tauranga."

Nationally, the median house price soared to $400,000 last month - a new record high.

Skyrocketing house prices in Auckland and Christchurch have been blamed for the sharp rise.

In Auckland, the median house price reached $562,000, and Canterbury/Westland recorded $359,000 - both regional peaks.

REINZ chief executive Helen O'Sullivan said the national median price jumped 8.1 per cent or $30,000 in the year to March.

Ninety per cent of this increase was from price movements in Auckland and Canterbury/Westland.

Overall, about 8000 residential sales occurred nationwide last month.

Most regions saw an increase in year-on-year sales volume, with Waikato/Bay of Plenty registering a 15 per cent jump.