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TAURANGA AND MT MAUNGANUI RESIDENTIAL REPORT 2008

APRIL2008

OVERVIEW

The residential market in Tauranga and Mt Maunganui has undergone a prolonged period of value growth, along with most regions throughout the country, but economic events over the last nine months have had a significant impact on the market. According to Real Estate Institute of New Zealand (REINZ) sales statistics, from the December 2002 quarter until June 2007 median sale price for dwellings increased 84%. This is comparable to the 80% value growth recorded nationally over the same period. In the following months, the median sale price has fluctuated slightly and for the quarter ending December 2007, sat at $400,000, an increase of just 1% over six months.

The number of transactions recorded by REINZ over the last year has been low, but not historically low, as has been observed nationally. In fact, in 2007 there were only 253 fewer sales recorded than in 2006. In the December 2007 quarter there was a resurgence in the number of sales reported, from just fewer than 600, in the September quarter, to 725 sales.

 

 

Another litmus test for the state of the residential market is the number of days it takes for a residential property to sell. From 2003 to 2005 it took an average of just less than eight weeks for a property to sell. For transactions that were settled in 2007, it took an average of 10 weeks to sell.

 

 

A measure for the long-term value growth in the residential market is to compare the proportion of sales falling within $100,000 price brackets in 2000 and 2007. In 2000, the majority of transactions were priced between $100,001 and $200,000 with a significant number of sales also falling between $200,001 and $300,000. In 2007 the majority of sales were distributed between $300,001 and $500,000 with more transactions completed at the higher end of the spectrum.

At the beginning of the century there was a distinct lack of sales completed at the high end of the market. REINZ recorded only seven sales in Tauranga and Mt Maunganui over $900,000. In 2007 126 sales were recorded over $900,000, reflecting the dramatic increase in values that has occurred over the period.

Over the next 12 months, the residential market in Tauranga and Mt Maunganui, or New Zealand, is not expected to grow. In fact, given the current economic climate Bayleys Research believes sales volumes will drop away over the course of 2008 and increasing interest rates will cause median sales values to flatten out and possibly drop by a modest amount in some areas. Anecdotal evidence from the market so far this year suggests that a number of vendors are dropping their asking prices in order to achieve a sale.