Think housing is unaffordable? Have a home for $25,000 in "quaint" Ohai - the Southland town even has sewerage and water.

Realtor Darryl Brown, of Ray White Invercargill, praised the property for the area's lifestyle and the mining and forestry jobs on offer.

It was also a potential investment - "well, it can't go any lower than that", Mr Brown said.

The house's price tag was so low because it was a converted shop, basically one big room with a shower installed by the owner, who was moving overseas, he said.


"For anyone looking to live there it's certainly cheap."

The property was attracting many inquiries from Australia, and an investor in New Guinea was taking serious interest in it, Mr Brown said.

But the 180sq m house is not the only bargain in Ohai, which at last count had a population of 357.

A three-bedroom house in the area is going for $29,000 and a quarter-acre section for $4000.

Southland Mayor Frana Cardno said there was little to fear about the place, despite the prices.

"There's even one or two Aucklanders moving down to that area. It's so beautiful."

There is a golf course, a bowling green, a swimming pool heated by coal donated from the local mine - and it is only an hour's drive to Invercargill.

"But you haven't got a McDonald's down the road or Kentucky Fried. If you aren't used to living like that, you might be frightened a bit," Ms Cardno said.

"If you want to have quality of life and no mortgage and have time for your family and doing things, these areas are very good."

You could leave your doors and windows open and feel safe.

She said she could not understand how Aucklanders could feed themselves after paying their mortgage bills or rent.

The Economist recently ranked New Zealand as having among the world's most overpriced housing markets, saying the country's homes were overvalued by 25 per cent.

On Trade Me, Ohai's converted shop is the cheapest among the houses on freehold land being sold. But Kawerau, in the Bay of Plenty, offers a one-bedroom "chalet" for $22,000.

* Population: 357
* Median income: $14,100
* Households with internet: 24.4 per cent

- Source: 2006 Census
NZ's cheapest properties
* House: $25,000, a converted shop in Ohai, Southland (above).
* Unit: $22,000, in block of flats in Kawerau, Bay of Plenty.
* Section: $4000, quarter-acre plot in Ohai, Southland.
* Removable house: Free, beach bach in Mt Maunganui in need of a new roof.

- Source: Trade Me