Dunedin's housing market is continuing to heat up as Auckland's spirals out of control, driving more people to shift to the South, real estate companies say.
Real estate agents spoken to by the Otago Daily Times this week have reported the upsurge in new arrivals from New Zealand's main centres was continuing, helping fuel the pressure on house prices and availability in the city.
That included young families looking to relocate, but also investors looking for better returns from afar, they said.
The result was a 10.3% jump in Dunedin house prices, to $323,735 in May, compared to the corresponding time last year, Quotable Value figures showed.
But demand in Dunedin showed no sign of slackening, as Auckland's average asking price hit $975,000 amid predictions it would top $1 million next year.
Core Logic statistics, released to the ODT this week, showed the proportion of house sales generated by Dunedin residents moving home had dropped, from 20% of all sales to 18%, in the past year.
People moving in from outside the city now accounted for 8% of all sales, while Aucklanders made up almost 3% of all sales in the last quarter of 2015.
About 9% of all sales went to investors from outside the city, although the Auckland share had doubled, from 2% to 4%, in the first quarter of this year, before settling back again.
However, Nidd Realty principal and managing director Joe Nidd, of Dunedin, said his company was experiencing continuing higher demand in Dunedin.
In the past two months, 35% of the "dozens'' of properties sold by his company had gone to buyers based outside the city, he said.
About 24.5% of all sales were to investors based outside the city, but one in 10 sales were also going to people from outside Dunedin looking to shift south permanently, he said.
"People are catching on to Dunedin generally as being on the map,'' he said.
That meant the company's rental property portfolio was also under pressure while new arrivals spent time in a "holding pattern'' - renting while "sussing out the city'' and finding a place to buy, he said.
"Our occupancy levels are higher than they've been in a long time ... they will trickle into our buying stats over the next year as well.''
But while the increased interest in Dunedin was good for existing homeowners looking to cash in, it was not without its downside.
The extra demand - together with low interest rates, KiwiSaver's availability and other factors - was helping fuel property market "gridlock'' in Dunedin, real estate agents said.
Mr Nidd said there were about 500 properties listed for sale in Dunedin at the moment, when there would normally be more than 750 at this time of year.
That "chronic shortage'' meant Dunedin homeowners who might consider a shift were waiting to find a new home before listing their own, he said.
"They can't find something because there's very little stock on the market, so they don't put their house on the market, so someone else can't buy their house.''
Other agents agreed, including LJ Hooker managing director Wayne Graham, who said Dunedin's property listings were at "an all-time low''.
"The demand has kept up, if not increased, there's been more properties sold, but less have come for sale, so it's really created a shortage.
"If ... more houses keep selling, it's obviously going to get serious.''
Metro Realty managing partner Mark Stevens said that interest was "coming from everywhere''.
"I've been doing this job for 31 years, and we've had highs and lows before, but this would be by far the most new purchases we've got coming from outside Dunedin.''
That was "really good'' news for homeowners, whose properties could sell at a premium, but it did mean first-time buyers faced an uphill battle to make it into their own home.
"It is sometimes a little bit tougher for the first-home buyers, because they are really competing with those investors, which is really tough on them, unfortunately.
"On the down side, unfortunately we meet a lot of younger couples that are finding it a little bit harder than what maybe they did a while ago.''
The continuing climb in property prices in Dunedin, coming after years of minimal growth, meant those struggling to scrape together a deposit were being left behind, he said.
"Every time they find a house, it's gone up in price.
"Unfortunately, the longer they look, the more they are being left behind,'' he said.
The extra interest also came after Dunedin in January launched a marketing campaign to encourage Aucklanders to head south.
The initiative centred on a supplement in The New Zealand Herald, highlighting the benefits of the Dunedin lifestyle, and appeared to have delivered results, Dunedin Mayor Dave Cull said.
Real estate agents were reporting "lots of phone calls'', while recruitment firms fielded more inquiries from those in Auckland seeking jobs in Dunedin, he said.
One family moving to Dunedin from Auckland had purchased a cafe in the city, he said.
The benefits included helping plug a demographic gap in the city, which was "a bit thin'' on family and working-age people, he said.
"It's essentially people we want, that we need.''
Inflated house prices that resulted would make it tougher for first-home buyers, but a balance needed to be struck, Mr Cull said.
"Really, really low values on homes aren't necessarily a sign of economic health. I appreciate that extra demand pushes up prices, but no demand doesn't do anyone much good either.''
Mr Nidd believed the latest surge in house prices was cyclical, and there was no danger of Dunedin following in Auckland's footsteps.
"I don't think we're following Auckland towards an out-of-hand situation. It doesn't feel like it's out of control,'' he said.
