Sun, jobs keep house prices on the rise

* Where house prices rose fastest (1981-2004). Adjusted for inflation. Herald graphic

House prices - inflation adjusted - dropped in 10 out of 73 regions nationally during the past 23 years but the areas with big increases followed the sun and jobs. The warmer the area and the more people, the higher the price rises.

To lose money, buy southern South Island or rural North Island areas where population is falling and with dubious job prospects.

To make money, buy in large northern cities or hot holiday spots.

A report out today from Arthur Grimes and Andrew Aitken of Motu Economic and Public Policy Research shows that buying in a sunny, hot area of the country reaped rewards.

Of the regions where prices fell, the report said: "Each of these areas tended to experience population stagnation or decline and low economic growth over much of the past two decades.

"Strongly performing areas are dominated by the major urban centres and vacation destinations."

The report was commissioned by the Government's Centre for Housing Research, Department of Building and Housing and Housing NZ Corporation and used data from Quotable Value.

Nationally, house prices rose 105 per cent in the 23 years from a 1981 median of $112,000 (in today's dollars) to $230,000 by 2004. On average, 267 houses were sold every quarter.

The big price jump happened in the 1992-2004 period when the median rose 74 per cent, compared with a more restrained increase in the previous decade.

Areas of fastest growth for new houses were Auckland with 676 average quarterly building consents in the 23 years, Christchurch (498), Manukau (482), North Shore (329), Tauranga (303), Waitakere (302), Rodney (234) and Wellington (225).

The areas of slowest building activity were Kawerau (one consent on average a quarter), Wairoa and Waimate (four each), Stratford and Waitomo (five each), Rangitikei, South Waikato, Mackenzie and Kaikoura (each with six).