Whanganui is number six on the list of growth areas for house sales in New Zealand and is experiencing what has become known as the "catch-up effect".

The housing market is similar to other asset markets in the sense that once one area becomes too expensive, buyers look for other areas to purchase.

When house prices surged in Auckland, buyers moved on to other large urban areas such as Hamilton, Tauranga, Wellington and Dunedin.

After prices in those areas escalated, buyers moved on to "next ring out" which saw inflation begin to surge in places like Rotorua, Whakatane, Carterton, Upper Hutt, Invercargill and Palmerston North.

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The growth rate in those areas is still strong but is beginning to stall as most of them now hold median value levels of above $400,000.

Buyers have now moved to the next most affordable areas with Whanganui currently sitting at number six on the list behind Wairoa, Opotiki, Tararua, Kawerau and Hawke's Bay.

Whanganui has been one of the "jewels in the crown" of the Regional North Island for some time with house values increasing by nearly 50 per cent over the last five years with annual growth sitting at 2.50 per cent, bringing the median value for the area to $265,000.

James Wilson, director of valuations for Valocity Housing, said Whanganui has been the only regional market that has really boomed in recent months.

"There have been a lot of first home buyers as well a lot of investors looking for relatively strong rental returns," he said.

"The market in Whanganui hasn't stalled yet but it is likely to slow down within the next 12 months going by what's happened elsewhere."

Recent sales activity has been centred around the more affordable suburbs with most of the activity centred around Whanganui East and Gonville.

*See the full One Roof Property report in today's liftout.

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One Roof's property report focuses on Springvale.
One Roof's property report focuses on Springvale.