Otago's median house price has reached a record $310,000, anecdotally supported by Auckland investors coming into the South.
Queenstown continues to soar, up 10.4% on a year ago from $752,500 to $830,500, while Central Otago prices leapt 32% from $415,000 to $547,500, Real Estate Institute of New Zealand (REINZ) data shows.
Despite analysts' claims of softening house prices, nationally they rose 11% and all regions reported increases. Record medians were struck in five regions: Wellington, $530,175; Northland, $410,000; Hawke's Bay, $345,000; Otago, $310,000; and Southland, $235,000.
The national volume of sales declined 11% to 6533 houses for December.
While the southern capital gains will please homeowners and investors, it is another nail in the coffin for first home buyers, whose deposit targets have been pushed out beyond $60,000, based on the $310,000 median across Otago.
A 20% deposit on Queenstown's median price would set first home buyers back more than $166,000, and a property investor's 40% deposit would be more than $330,000.
Dunedin-based REINZ regional commentator Liz Nidd said investors from Auckland were still active in the market, and there was more activity from them than other investor groups.
The Reserve Bank imposed stricter loan to value ratio (LVR) restrictions on banks last October, requiring housing investors across the country to stump up a 40% deposit, to dampen rampant prices, not just in Auckland but in regional centres with overheated prices.
The LVR's effect so far has differed around Otago: Dunedin's cheaper housing stock is still attracting investors, while higher prices in Queenstown and surrounds mean the LVRs are deterring investors.
In December, Queenstown house values remained above $1million for the second consecutive month, according to Quotable Value data, while the 848 houses sold around the country for more than $1million made up 13% of all sales, up almost 3% on a year ago.
Just as tellingly, houses in the $600,000-$1million bracket also rose 3% to make up 27% of all sales, 1687 houses.
Properties under $400,000 declined in market share by 6% to 34%, or 2227 of all the 6533 houses sold in December.
Mrs Nidd said: ''First home buyers are also more active, indicating that the LVR rules have been absorbed by the [Dunedin] market and it is now moving to a more normal situation.''
However, REINZ Queenstown-based regional director Gail Hudson said investor interest was not as strong as it had been before the LVR regulation.
She said the new LVR rules meant first home buyers were continuing to be less active, coupled with the strong prices across the region.
''Although, when a suitable property becomes available there is plenty of activity,'' Mrs Hudson said.
Mrs Nidd said prices across Otago had continued to firm, reflected in the latest December record.
Westpac acting chief economist Michael Gordon said that for the third month in a row, sales fell slightly in seasonally adjusted terms, while prices continued to edge higher, albeit at a slower pace than in the first half of 2016.
''We think the turnaround in [higher mortgage] borrowing costs could have a more meaningful impact on house prices than the LVR restrictions,'' he said.
In Westpac's last quarterly economic overview, Mr Gordon revised its house price growth forecast for next year downwards to just 5%, compared with an estimated 14% rise during 2016.
