Market set to "potter along"

11th June, 2010

Property values in Tauranga increased by 0.4% over the past year (calculated over the three months ending May 2010 in comparison to the same period last year), down slightly on the 0.6% annual growth reported in April. The average sale price for the region decreased from $412,080 to $409,376.

Shayne Donovan-Grammer of QV Valuations said; "The Tauranga region, in my view, is in a brittle state. In the recent past prices have eased back steadily, with a clear oversupply of properties on the market. To compound matters, activity is light, which is backed up from what I am hearing from fellow property professionals such as lawyers, bankers and real estate agents."

"The tax announcements haven't necessarily detracted investors further, but are just another compounding factor which suggests few purchases of new property by this sector," Donovan-Grammer said.

"On the upside for some, this is becoming a market suited to the first home buyer. Those who have bought over the last few years are struggling to get their money back and we've seen losses come through in the region of $30,000 to $50,000 for properties under the $400,000 mark. With top end properties, these losses are usually magnified. For example; a property in Omokoroa which sold for $1,240,000 in 2005 has sold in March for $890,000. A prime downtown Mt Maunganui property sold at the end of 2004 for $1,100,000 and sold again this year for $800,000. On Papamoa Beach Road a property which sold in 2006 for $900,000 has resold this year for $600,000. These examples represent some of the more extreme cases," he said.