Runaway Rotorua property market breaks another record
Rotorua’s runaway residential property market has busted all predictions of a post-lockdown dip – and it recently hit another major milestone in the process.
The town’s average property value increased by 3.95% this quarter and 15.52% over the past 12 months, crossing the $600,000 mark for the first time in January 2021. It completes what local Quotable Value (QV) property consultant Derek Turnwald has described as “a remarkable turnaround” for the popular tourist destination.
“The Rotorua district is experiencing a massive downturn in tourist numbers that will likely take years to recover from, and yet, besides a couple of little speed wobbles when we immediately got out of lockdown last year, its residential property market has gone from strength to strength.
“This latest milestone in particular marks a remarkable turnaround for a residential property market that was facing a great deal of pessimism immediately following the closure of New Zealand’s borders as a result of the Covid-19 pandemic and the subsequent impact that has had on our tourism sector.
“It wasn’t that long ago that many were predicting the market would drop – now we’re looking at double-figure annual growth and an average price of more than $600,000.”
Rotorua’s top-performing suburb over the past 12 months was Fordlands, where property prices increased by more than 30% last year and the median time to sell was just 12 days. Mr Turnwald said investors were particularly interested in this suburb due to its high yields – that is essentially the amount of money an investor makes when they subtract their mortgage costs from the rent.
At the other end of the spectrum, Tihitonga, one of Rotorua’s highest-value suburbs, was also one of its top-performing suburbs last year. “This shows the demand for residential property in Rotorua has been strong across all value ranges,” Mr Turnwald added.
Key drivers include record-low interest rates and a low amount of properties being listed for sale – a “perfect storm” that Mr Turnwald said would likely continue to fuel the market throughout 2021. “The market probably won’t be too different this year, although it could be a little more subdued due to LVR restrictions and potentially a little bit of prospective buyer weariness sets in.
“But we’re certainly not out of the woods yet in terms of Covid-19 and probably haven’t fully dealt with all the economic ramifications from it. As we discovered last year, everything can change in an instant.”