Record prices continue to dominate monthly housing data, with Central Otago Lakes' $730,000 median price and Otago's $295,000 among the top five record prices struck across the country for June.
ASB economist Kim Mundy said: "The Reserve Bank has been between a rock and a hard place for some time time now, and June's data does little to ease the pressure''.
"Outside of Auckland, low interest rates and displaced Auckland demand is responsible for driving demand,'' she said.
Around Dunedin, demand remains strong while the number of properties on offer was declining, with the mix of investors and first home buyers affecting prices.
Prices rose 18.5% compared with June last year to $320,000, according to the Real Estate Institute of New Zealand.
Central Otago Lakes region overall booked a staggering 42.4% price rise on a year ago, to $730,000, underpinned by Queenstown's 26% rise to $854,500 and Central Otago 27% rise to $468,500.
Separately, Central Otago was accorded the least affordable area in the country last week, based on household income, prices and interest rates; dethroning Auckland.
REINZ regional director in Queenstown Gail Hudson said the number of Queenstown Lakes area properties available for sale remained "at very low levels'', compared with demand.
REINZ regional commentator in Dunedin Liz Nidd said first home buyers were having to act more quickly to secure properties because of the strong demand and falling number of properties for sale.
"Investors are also continuing to be attracted to the Otago region, and more particularly the Dunedin market, pushing up vendor expectations and putting pressure on prices,'' she said.
The national median price eased slightly, by 1%, from $506,000 to $500,000. Record highs were struck in Northland, Auckland, Waikato/Bay of Plenty, Otago and Central Otago Lakes.
Prices rose 4% in Dunedin, but fell 1% in North Otago and 15% in South Otago.
Sales volumes across Otago rose 12%, compared with June last year, with sales rising 23% in South Otago, 15% in Dunedin and 2% in North Otago.
The number of properties for sale has fallen by half in the past year, REINZ said.
ASB's Ms Mundy said she expected the Reserve Bank to drop the record low 2.25% official cash rate by 25 basis points in August, but cautioned if the bank made other macro-prudential cuts, a cut could be deferred.
REINZ spokesman Bryan Thomson said although June was generally quieter, there had been no let-up in the rate of price increases across the country.
"Although there is much discussion about the housing market and increasing new build supply, the fact remains that the vast majority of the supply comes from the sale of existing properties,'' he said.
