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Over the past three months, residential property prices have risen by an average of 2.7%, the average price rising by just 0.6% in September to $689,582.
House prices have risen 20.8% in Dunedin in the year to September 30, compared with the previous corresponding period.
Dunedin’s residential property market returned to normal quickly after the Covid-19 lockdown, local QV property consultant Andrew Ronald said.
“Value levels are still showing positive growth but at a lower rate of increase, especially compared to the first four months of the year when prices were increasing roughly four times faster than they are now."
Well-presented and well-located properties in particular were selling at the moment, top-level homes outpacing entry-level properties in terms of value growth by about 2%.
"Given the shortage of supply and high demand we’re also seeing many more opting to upgrade their existing home, rather than purchasing an upgraded one,” he said.
Queenstown’s house price growth has picked up over the past three months.
The average growth rate was 2.9%, 6.4% and 9.4% in July, August and September, respectively.
In stark contrast to Queenstown, residential property prices in Invercargill have remained remarkably consistent for five months in a row.
The city’s average house value increased 3.7% over the past quarter to $460,389.
Prices increased 1% in September, following similar rises within the range of 0.8%-1.4% in May, June, July and August.
Invercargill prices increased 4% and 3% in February and April, respectively.
Favourable borrowing rates were still encouraging buyers to the market, stimulating market activity, Mr Ronald said.
"There is limited stock available, which is helping to fuel price increases."
There was strong demand for most property types.
Investor activity had dropped off in recent months, although there was still strong demand from first-home buyers competing for homes within the $350,000-$500,000 bracket.
There was also strong demand for building sites throughout the wider Invercargill locality, price levels having strengthened considerably over recent months, Mr Ronald said.