"Some of the cheaper places are nicely presented, others are in need of maintenance and can sometimes be overpriced depending on their condition," Mr Hereford said.
"Investors usually buy the low priced houses to rent out at a good return but they are not always a quick sale."
Rental returns on the lower priced houses are often over $200 per week, he said.
Latest real estate industry figures show houses in all price ranges - from $100,000 to over $1 million - remain on the market on average for around 43 days before being sold, he said.
There were currently 25 houses for sale in Rotorua priced above $1 million - the majority in the lakes region.
"First home buyers are normally looking at spending a little more to buy a quality modest house."
The loan value ratio introduced recently required a minimum 20 per cent deposit and was proving difficult for first home buyers in Rotorua to purchase a house, he said.
However in spite of the LVR conditions, there was still home affordability in Rotorua, he said.
"Prices have been chipped back over the past 5-6 years and the mortgage rates are low which has meant purchasing your first home has become easier than it was.
"There are some real positive signs out there."
Harcourts Rotorua manager Glenn Austin said buying a home under $150,000 was still cheaper than renting.
A three bedroom house for sale in Beech Pl, Owhata for $80,000 required a $16,000 deposit and minimum fortnightly mortgage repayments were $169, he said.
However raising the initial deposit was still difficult for a young couple and family, he said.
"Housing in Rotorua is affordable as far as meeting the repayments but it still difficult saving for the deposit."
Harcourts agent Trevor Cochrane, who has listed the Beech Pl property, said the overseas vendor had dropped the price to meet the market.
"The property requires some maintenance but it would suit someone buying their first home.
"We get a lot of inquiries from people looking for a bargain to buy as a rental investment.
"The lower priced houses require a small outlay and give a good return."