Rotorua property values up slightly

Rotorua property values have increased only marginally in the past year, new figures reveal, as homeowners brace for another possible interest rates hike next week.

Rotorua recorded a 1.4 per cent rise in the year to May to an average value of $273,458, according to state valuer Quotable Value.

Despite the increase, local values remain 6.9 per cent below their 2007 market peak.

In contrast, property values nationwide jumped 8.2 per cent over the past 12 months to $471,791, and are up 13.9 per cent on the 2007 market peak. However, the increase was mainly driven by the overheated Auckland and Christchurch markets.

LJ Hooker Rotorua agent Stephen Pepper said he had not seen property values increasing locally, but more investors were taking an interest in Rotorua.

"We've noticed people have really been jumping on property there."

Renters were also looking to buy while properties were still affordable, because paying a mortgage could be cheaper than paying rent.

QV national spokeswoman Andrea Rush said while values in all the main centres had increased to varying levels, some areas within the cities were showing decreases and values in many of the smaller regions were flat or decreasing.

"Sales volumes around the country are 10 to 15 per cent lower than they were this time last year which could be a normal winter seasonal effect but it could also be a precursor to values dropping."

The Reserve Bank lending restrictions continued to affect many regions, with slower sales in the first home buyer sector of the market, she said.

Meanwhile, it has been predicted the Reserve Bank could raise interest rates again when it makes its next official cash rate announcement next week, putting further pressure on mortgage holders. The OCR is expected to rise to 3.25 per cent.