Rotorua homeowners are still enjoying large increases in house values while national values hit the slowest rate in two years.
But as price and demand reach their limits in the city, "those days may be numbered" one local agent says.
The QV House Price Index for May, released today, shows the average current value in Rotorua is now $394,408 - up 23.9 per cent in the past 12 months and 2 per cent in the past three months.
Nationally average values are up 9.7 per cent over the past year which is the slowest annual rate in two years. Nationally values rose by 0.4 per cent over the past three months with the nationwide average value now $634,018.
QV home-value Rotorua registered valuer Michael Power said Rotorua's annual growth was still above the main urban areas' growth rates, as was the case with several other provincial centres.
"This is due largely to a catch up or closing the value gap that often occurs when the overall market goes through a sustained upward movement.
"With an average sale price of just under $400,000, Rotorua is still experiencing good demand from purchasers either relocating to the city or trading within."
But Mr Power said the 12 month percentage change was slightly lower than the April figures indicating an "easing or levelling off in the growth rate as is being experienced in most cities in New Zealand influenced by the latest round of loan to value ratio restrictions, tougher lending criteria from the banks and the possibility of a future rise in interest rates".
Professionals McDowell Real Estate co-owner Steve Lovegrove said Rotorua's growth was influenced by the shortage of properties, people migrating to the city for lifestyle changes and the market sitting below the national average.
"It doesn't surprise me that prices continue to climb in Rotorua but it will come to a point where property prices are pushed to expiry and a stalemate is created where buyers are price resistant.
"We see this happening in bigger cities, property is unaffordable so people look to alternative options. It started with Auckland and is now happening in the likes of Tauranga and Hamilton too.
"Rotorua has not yet reached its limits but its days may be limited. Those thinking of taking advantage of the current market shouldn't wait to put their house on the market in spring."
Mr Lovegrove said the good news was Rotorua could sustain its growth.
"We are not in the same position as Auckland where they are locked between two harbours and have no land - we've got land all around us. If modern urban developments continue to be developed, we will be able to satisfy that demand."
LJ Hooker Rotorua principal Malcolm Forsyth said traditionally Rotorua tended to follow what other centres were doing.
"We may still be riding the crest of the wave but we also have to be conscious that when we see values in areas like Auckland, Tauranga and Hamilton slowing, it's going to slow for us too.
"It doesn't surprise me that while other centres have run out of gas, we're still going because we are still so well priced compared to those main areas, but we have to acknowledge it won't stay this way."
He said they had still been seeing plenty of activity but as more properties came on to the market, Rotorua's values would start to slow.
Average house values for May