Demand is still strong for desirable suburbs in Tauranga, while the city is now the country's third most expensive to rent in.

Tauranga home values have increased by 14.6 per cent year on year and 1.6 per cent over the past three months.

Values are now 42.8 per cent higher than the previous peak of 2007. The average value in the city is $687,364.

Meanwhile, Western Bay of Plenty values have increased 16.3 per cent year on year and 3.7 per cent over the past three months. The average value in the district is now $612,363.

QV homevalue Tauranga registered valuer David Hume says demand for Mount Maunganui properties remains strong and record prices continue to be achieved.

'Desirable suburbs around Tauranga such as Matua, Bethlehem and the Avenues are also continuing to see strong levels of demand and record prices being achieved for well-located and presented properties.

'The Western Bay of Plenty market is also showing steady demand, although not at the same frantic levels seen throughout 2016. Values are still rising, but not as quickly as they were.”

He adds strong migration to the area, combined with a lack of rental accommodation, continues to push rents up, with Tauranga now the third most expensive city in New Zealand with an average rental of $475 per week.

'Activity in the investor market is also at more normalised levels to that witnessed through 2015/16 as a result of the LVR restrictions to 40 per cent equity required.”