First-home buyers worried that Tauranga is out of their reach are more likely to find an affordable home there than in Auckland, OneRoof analysis shows.
Although the number of Tauranga suburbs with a median sales price of less than $500,000 has shrunk from 16 in 2014 to five this year, the city has more pockets of affordability than Auckland.
OneRoof data shows less than half the suburbs in the city have a median sales price of above $650,000 - the proposed price of a three-bedroom KiwiBuild home in Auckland.
In addition to the five suburbs that have a median sales price of less than $500,000, there are a further six suburbs that median sales price of between $500,000 and $650,000.
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Meanwhile, the number of suburbs in Auckland with median values of less than $650,000 has shrunk from 110 suburbs in 2013 (out of a total of 218) to 57 in 2015 and to 19 this year.
First-time buyers looking to Tauranga and other regions close to Auckland for affordable properties have reported difficulty breaking into those markets.
Tauranga's property market has boomed in recent years, driven in part by the influx of cashed-up Aucklanders seeking the benefits of Tauranga's warm coastal climate and by the city's growing economic status.
The average value of property in Tauranga has risen almost four percent in the 12 months to April this year, from $678,643 to $704,183.
However, figures jointly released by the Property Institute and property data company Valocity showed that Tauranga properties in the $300,000-$500,000 value band accounted for 23.6 percent of sales in the last three months and that first-time buyers accounted for more than 25 percent of the market in the four months to March 2018.
The sub-$500,000 suburbs identified by OneRoof were: Brookfield ($495,000); Gate Pa ($445,000); Greerton ($470,000); Judea ($460,000); and Parkvale ($439,000). The suburbs with median sales prices of between $500,000 and $650,000 were: Bellevue ($520,000); Hairini ($515,000); Maungatapu ($585,000); Otumoetai ($630,000); Tauranga South ($585,000); and Welcome Bay ($595,000).
Although none of these suburbs is in a prime beach-front position, all were still relatively close to the beaches, the city centre and other major amenities.
Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said Tauranga’s popularity with outside buyers took off in 2015. Those who made significant capital gains from selling up in higher value property markets such as Auckland found they had considerable purchase power in the Tauranga.
“Most of the areas our buyers are coming from have seen an increase in their homes values. So the change in most cases is relative for comparable properties,” he said.
“However, if those relocating are looking to improve their real estate investment via an upsize or improvement on the location from where they have come from, then they will need to adjust their expectations.
“Tauranga continues to provide a great lifestyle choice and now that business development has followed the future looks even more positive and growth will continue.”
Property Institute chief executive Ashley Church said that although much of Tauranga is within reach of first-time buyers, the city was a major economic centre that had grown in stature and popularity, and buyers had to treat it as such. “It has a good climate and it has a pretty strong service economy. Businesses there can attract and retain good staff,” he said.
He said it was likely the lift in values and economic momentum within Tauranga would spread outwards. “I think if we were having this conversation in 10 years’ time, you might find that that success story has continued further south to Taranaki, potentially Hawke’s Bay and even Manawatu.”
