A new property report reveals North Island house prices are trailing Auckland figures, which are nudging their way back to their pre-recession market peak.
The Property Report, published in today's Herald, shows average house prices since the 2007 market peak have climbed throughout Auckland city, but prices in other North Island cities are up to nearly 18 per cent below what they were four years ago.
QV's national house price index - based on sale prices against rating capital valuations - showed the average Whangarei home was 17.5 per cent cheaper at the end of January than at the peak.
Rotorua prices were down 15.4 per cent, Taupo's were down 14.5 per cent and Tauranga and Hamilton prices were down around 11 per cent.
In Hamilton, QV spokesman Richard Allen said that while there was some activity from people buying their second or third home, the top and bottom of the city's market remained generally stagnant.
"Nothing has changed much in the last six to 12 months, with no discernible lift in sales or price," he told Property Report.
Tauranga QV valuer Shayne Donovan-Grammer said low interest rates had caused an increase in activity in the city, but from a low base and generally in homes worth less than $350,000.
Economist Dr Rodney Dickens, a housing market specialist, said: "Upper and central North Island centres often follow in the footsteps of Auckland, but house prices in the provincial centres don't go up by magic.
"A number of North Island provincial centres are still recovering from prices having been driven well above what locals could afford by investors during the 2003-2007 boom, and that makes them unlikely candidates for booming house prices any time soon."
House prices in the new Super City and the former Auckland City Council area had risen by 1.9 per cent and 4.4 per cent since the market peak.
But in metropolitan Auckland, prices were slightly down on the peak in North Shore (down 0.9 per cent), Waitakere (down 1.8 per cent) and Manukau (down 0.9 per cent).
QV Auckland valuer Glenda Whitehead said activity levels in Auckland central and the wider suburbs remained "patchy" and buyers were taking their time.
Epsom, Hillcrest and Weymouth topped a Property Report's list of city suburbs which, using QV's E-Valuer, recorded the highest sale price rise in the last three months of 2011 - up 8.6 per cent, 6.3 per cent and 4.6 per cent respectively.
The largest drops in prices were recorded in Otara (down 3.9 per cent), Papakura (down 3 per cent) and Opaheke (down 2.7 per cent).
The report showed house prices throughout the new Super City rose 5.1 per cent in the past year.
The former Auckland City Council suburbs, North Shore, Waitakere and Manukau went up 7.2 per cent, 4 per cent, 3.2 per cent and 2.8 per cent respectively over the year.
And in the final three months of last year compared to the three months before, the median sale price in the Auckland region rose 3 per cent, from $495,000 to $510,000.
Rises were seen in the former Waitakere City ($395,000 to $410,000), North Shore City ($575,000 to $585,000) and Manukau City ($464,000 to $471,000).
Only Auckland City showed a drop, from $658,000 to $655,000.
Dr Dickens said that although the demand-supply balance in the Auckland market was tighter than elsewhere in the country, the gap between the number of sales and listings was still around half what it was in 2007.
"This suggests that Auckland is heading for solid increases in house prices as distinct from a bubble or a boom. And these increases are likely to halt when mortgage interest rates are eventually and inevitably increased."
New Zealand Institute of Economic Research principal economist Shamubeel Eaqub told Property Report that prices remained "extremely high" relative to incomes and rents.
"The well-heeled areas like Epsom and Mt Eden are doing very well, but areas such as Manurewa are languishing."