Low interest rates are discouraging savers but spurring house buyers to new highs.
Barfoot & Thompson says it has recorded its highest Auckland average house price - at $582,285 - since records started about 20 years ago.
Sale prices jumped $14,267 in a month, bucking the usual winter blues.
Barfoot managing director Peter Thompson, whose firm sells one in every three houses in the region, said mortgage affordability was attracting buyers, but he issued a warning.
"Interest rates will go up again, so I caution people to borrow what they can afford, don't overcommit.
"[I] would be looking at a minimum of a 15 per cent deposit and I wouldn't be mortgaging up to 95 or 100 per cent of the property. Don't go above 80 or 85 per cent," Mr Thompson said.
Barfoots recorded its best May since 2003; sales were up 55 per cent on April and 31 per cent on May 2011.
Interest.co.nz said yesterday that those with mortgages were getting a better deal than savers.
The average one-year bank mortgage rate was 5.63 per cent on April 20 but fell to 5.30 per cent by June 1. The average one-year term deposit rate fell from 4.49 per cent to 4.41 per cent.
Jonathan Windust of Milford Asset Management said extremely low returns were not good for savers or retirees.
"It provides them with little investment return without taking some investment risk," he said, saying even blue-chip government bonds made around zero return.
"Real interest rates - that is rates after taking into account inflation - are negative in many countries. In New Zealand, yields on 10-year government bonds are somewhat higher at 3.2 per cent. However, after taking off tax and allowing for inflation, the real yield on NZ government bonds is close to zero," Mr Windust said.
ASB economist Jane Turner pointed to low interest rates as a big driver for rising housing activity. The housing market continued to recover and the recent drop in fixed-term mortgage rates below floating rates was likely to provide further support to housing demand in the coming months, she predicted.
Severe under-building was one of the reasons for rising house prices, she said, and until Auckland and Canterbury saw a meaningful increase in construction, pressures would continue to push house prices upward.
"Strong sales prices are starting to attract new listings on the market, which also increased strongly in May," she said of the Barfoot figures.
"Nonetheless, the overall level of new listings remains low and not sufficient to meet demand. Tight supply conditions will continue to place upward pressure on house prices."
Mr Thompson also cited severe under-building.
The low number of new homes built in past years, coupled with Auckland's population growth, had created a situation where supply remained the issue, and this was reflected in the prices being obtained, he said.
People should consider splitting their investments between property, the bank and investment vehicles like the NZX, he said. But plunging Facebook shares showed how sharemarkets often carried higher risks.
"A house is an asset you can always sell."By Anne Gibson @Anne Gibson Email Anne