Rotorua bucks house price trend, says agent

International statistics from The Economist magazine have found New Zealand house prices are among the world's most overpriced.

However, a local real estate agent says properties are selling below their rateable value and there has never been a better time to buy in Rotorua.

The Economist magazine, which tracks price movements in 21 countries, said years of dizzying ascents were coming to an end for much of the world. But its chart showed New Zealand was bucking the trend.

Professionals real estate agent Ian McDowell said he had been encouraging first-home buyers or those thinking about investing. "This is a time to buy."

The magazine rated Kiwi house prices compared to rents and incomes. Compared to the amount of rental income our houses generate, we rank second most expensive in the world; New Zealand houses are 66 per cent over-valued, behind Canada. When compared to disposable incomes, our houses are 22 per cent over-valued - sixth on the list.

House sales lifted in almost every region last month, with overall volumes jumping 20 per cent from a year ago, according to latest figures.

Real Estate Institute of New Zealand (REINZ) data shows there were 5907 unconditional sales in July, a 19.9 per cent jump compared with the same period last year, but a 3.7 per cent fall from June.

The national median house price took an $11,000 fall to $361,000, after a record high of $372,000 in June.

The average selling price for a Rotorua house in July this year was $275,000 - up 7.8 per cent from the same time last year, and up 1.4 per cent from 2008.

Mr McDowell said Rotorua house prices had been depressed for some time, which he put down to the flagging economy.

"We've been badly affected [by the downturn], we've had four hard years and prices are very weak.

"Sales have trended up gradually through this year and there's been no great jump in prices yet, but I think we're on the verge of it."

Mr McDowell said there were fewer properties on the market than usual and sales numbers had been up.

On average it took 68 days for a house to sell in Rotorua, compared with 41 days for the same time last year.

Ninety houses were sold in Rotorua in July.

Mortgage interest rates are at a low as different banks compete to under cut each other.

ASB economist, Jane Turner said NZ mortgage rates had only just moved off the lowest levels in 10 years, with floating rates at 40-year lows.

"The reason for this weakness reflects the slow economic recovery we're having in New Zealand and the continuing risks that are coming from offshore, particularly from the Eurozone debt crisis."