Rotorua house prices being pushed up

A drop in property listings - coupled with rising interest from out-of-towners - is pushing Rotorua house prices up, a local real estate expert says.

QV's May residential price movement index showed Rotorua average home values increased slightly year-on-year to $276,865. This was also a small increase on the past three months, but below the previous market peak of late 2007.

Rotorua had 147 sales settled in May, according to QV records.

Ian McDowell, managing director of McDowell Professionals, said there was a lot of demand for properties in the $300,000 to $450,000 price range.

"There used to be about 1000 properties on the market, now there's about 700," he said. "Median house prices are going up all the time, which is a good thing."

More out-of-town buyers were coming to Rotorua, he said.

"There's a lot of older people coming to Rotorua for the lifestyle. They're selling their Auckland homes and buying an equivalent property for half the price.

"The lakes and mountain biking are popular drawcards."

Activity was good at the bottom and high end of the markets as well, he said.

"First home buyers are coming back in to the market. There's also good sales for $600,000, $700,000 and $800,000."

Nationwide, residential property values continued to soar in May - up 3.1 per cent over the past three months and 9 per cent year-on-year.

This was the fastest year-on-year rise in 15 months, taking values to 24.1 per cent above the previous market peak of late 2007.

QV national spokeswoman Andrea Rush said the market continued to be affected by activity in larger centres.

"The steepening line of the national index reflects value increases across all of New Zealand's main centres over the past three months with the exception of Wellington, which is showing a slight decrease," she said.

"The usual winter downturn does not seem to have dampened demand as high net migration, relatively low interest rates and a constrained housing supply continue to fuel demand in the Auckland market.

"This demand is also now spreading to provincial centres nearer to Auckland with values up in Tauranga, Hamilton, Cambridge, Pokeno and towns in the Hauraki District."

Changes coming in October, including the Reserve Bank's new loan-to-value ratio limits, requiring borrowers in the Auckland Council area to have a deposit of at least 30 per cent and the Government's re-classification to investment property taxes hadn't had an obvious impact yet, Ms Rush said.