Kawerau house prices are booming and the town's mayor is not surprised.

Figures released by realestate.co.nz show the average asking price in Kawerau has more than doubled in the past decade – the biggest increase of all districts nationwide.

In 2011, the average asking price for a home in Kawerau was $151,000. By the end of 2020, this figure had increased 132 percent to $351,413.

Mayor Malcolm Campbell says he's not surprised at the news as there were now many new faces in the small town that he didn't recognise.

'I'm starting to be a stranger in my own town because there's all these new people coming in.

'But prices had to go up, didn't they, because we have been well behind for some years. It's all good news.”

Campbell says prices in Kawerau have been ridiculously low for many years and these prices are starting to reflect the true value of homes in the district.

He says this began in the 1970s when many people were laid off from the local mill, the largest employer in town, and began to leave Kawerau for jobs elsewhere.

'A two-bedroom house was going for $4000; a three-bedroom was $6000 and brand-new homes around River Road were going for $15,000 – brand spanking new homes."

'I built in the 70s here and that cost me $25,000.”

Campbell says it's at this point investors came in and made 47 per cent of the homes into rentals.

Now, first home buyers and retirees are starting to see the value in Kawerau where quality homes on decent sections can still be purchased for a good price.

Many retirees are motorhome enthusiasts and see the town as a home base from which to travel the country.

Campbell says one of the issues now facing the town is that it would find it hard to keep up with its own growth.

Several groups in the community have received multi-million-dollar grants from the Provincial Growth Fund for industry, training, and infrastructure. With this comes an increased demand for housing for people seeking job opportunities.

Campbell says the Kawerau District Council had to be creative when meeting this challenge as it was a small district, the smallest in New Zealand, and landlocked by iwi-owned land.

The council has been making land available for residential subdivision, including a council-owned retirement village.

It is also looking at removing the reserve status from Stoneham Park to make it available for residential development – something Campbell is pushing to happen.

'That's the only land we have now that's available to do something with,” he said.

'We are working with Whakatane at this time about creating a housing development in the Whakatane district close to Whakatane for workers to come and work here. That's a big deal. I think some huge progress will happen in the next 12 months.”

Realtors in Kawerau have been kept busy as first home buyers and retirees look to move to the town. TROY BAKER / WHAKATANE BEACON.

Harcourts real estate agent Lewis Ramsay has been selling houses in Kawerau for the last 20 years and says the town is proving popular with retirees and first-home buyers.

'Kawerau has been undervalued to start with and then suddenly a lot of retirees heard about it, cashed up, and moved in.

'I've seen it, in the last five years there has been huge increases.”

Ramsay says consequently, rentals are now scarce in the town and people who have bought homes are working on improving them.

He says the work the council has been doing to tidy up the town has also drawn more people along with new buildings, such as Tarawera High School and the medical centre.

Despite the rise in prices, Kawerau is still the cheapest place to buy in the Bay of Plenty.

Western Bay of Plenty tops the table for highest prices with an average asking price of $992,948.

Tauranga is second with an average price of $893,258.