Dunedin and Invercargill have outstripped all cities around the country with average house prices up 11%-12% during the past year - more than triple the countrywide average of 3.5% gains.
The Queenstown Lakes area made a 6.2% gain on a year ago to touch $1.17million, higher than the Auckland-wide $1.05million average, although five Auckland sub-regions are higher, according to Quotable Value (QV) data for November released yesterday.
Nationally, regional areas have enjoyed gains most months this year, as Auckland's market cools and cashed up buyers head out to regional areas; underpinning rising prices.
Dunedin's strength is being credited to active first-home buyers and investors, the latter getting higher rental yields than most other places in the country.
On a year ago Dunedin was up 11.7% and Invercargill 12.2%, while Auckland's gain was just 0.4%, Hamilton 4%, Wellington 8.1% and Christchurch 0.4%.
Values in Dunedin continued their upward trend having increased 11.7% in the year to November and 3.8% over the past three months; the average city value being $431,665.
QV general manager David Nagel said New Zealand's ''more affordable'' main centres, particularly Dunedin and wider Wellington region, continued to show a strong rate of growth in a cooling market.
''Dunedin, with a relatively affordable entry-level price coupled with attractive premium areas, continues to appeal to a variety of buyers, leading to strong quarterly value growth of 3.8%,'' he said.
Mr Nagel said Dunedin and wider Wellington appealed to a broad range of buyers, particularly first-home buyers and investors, due to their relative affordability and higher rental yields on offer.
''These factors enable the values in these regions to continue their upward trend, even in a cooling market.
''Dunedin and the wider Wellington region continue to lead the way, where value growth remains strong,'' he said.
QV Dunedin property consultant Aidan Young said buyer competition around the city remained high and well-presented properties in sought-after locations were ''generally selling quickly''.
''First-home buyers remain active, particularly in the lower end of the market up to the $400,000 mark,'' Mr Young said.
Multiple-offers in the tender sales process remained common and auction activity across all value ranges was good, reflecting that Dunedin appealed to a broad range of buyer types.
''Open homes still appear very busy indicating that the market remains active following the spring surge in the lead up to Christmas,'' Mr Young said.
Mr Nagel at the ''top-end'' of the market, areas with average values above $1million, such as the Queenstown Lakes, were are generally experiencing a cooling in market activity and growth.
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The language the industry as usual reflects their interests, not the public interest. "Dunedin and the wider Wellington region continue to lead the way"? It's a cause for dismay, not celebration, and I say that as someone who has their own home.