Hawke's Bay house values jumped 20 per cent in May compared with May last year but first-home buyers are still active.
Napier values rose 19.3 per cent year-on-year and 4.1 per cent over the past three months according to the QV House Price Index. The average Napier house value is now $436,454.
The Hastings market rose 21.9 per cent year-on-year and 4.2 per cent over the past three months. The average Hastings house costs $413,801.
Napier is 28.3 per cent above the previous market peak of 2007 and Hastings 32.8 per cent higher than 2007.
Central Hawke's Bay house price sales were up 17.9 per cent year on year to $266,382. Wairoa was up 9.9 per cent to $168,185 and Tararua District up 5.5 per cent to $199,041.
QV Hawkes Bay valuer Michelle Drinkrow said there was plenty of activity in the Hawke's Bay market and while there was good buyer interest they were "less frenzied".
"We are continuing to see a lot of out-of-town buyers in the market particularly in the $1 million-plus price bracket," she said.
"We are continuing to see a lack of listings and there's also a lack of vacant land available. We understand interest in newly completed residential subdivisions is high and in turn the price of vacant land has been steadily increasing."
A recent open day at a Hastings subdivision sold 15 sections within hours, part of a 175-section development programmed over five years between Lyndhurst and Arbuckle roads in Frimley.
Ranging from 540 square metres to 700 square metres and selling from $220,000 to $257,000, the open day followed a building-industry barbecue for builders who handed over cheques instead of queuing for sausages.
"We were overwhelmed by the interest and had multiple buyers for most of the sections," project manager Tim Wilkins said.
"It's well publicised that there is a major shortage of land ready to be developed and we've worked as quickly as we can to get this land to market, however we didn't expect the first sites to be snapped up so quickly."
Cole Murray mortgage broker Steve Davies said May was a top month for mortgage applications, despite the Reserve Bank's 40 per cent deposit requirement for investors.
With fewer investors in the low end of the market, first-home buyers were having more offers accepted "which is very pleasing".
He said KiwiSaver was increasingly used by young and old to purchase a first home.
"We have people in mid-40s and early-50s that used to be renters and now look at their KiwiSaver with $40,000 to $50,000 and realise they could be homeowners.
"There appears to be a shortage of stock on the over-$300,000 mark - nothing seems to stay on the market long before being snapped up."
While winter was traditionally slower for real estate he predicted strong buyer interest, based on the volume of mortgage applications processed, but vendor preference for a spring listing would make June "interesting".