Well located Mount Maunganui properties are setting new benchmarks as house values in the area continue to rise.

The recent sale of a renovated three-bedroom 1950's Bungalow on a 309 square metre section for $905,000 at auction earlier this month is a good example of this.

The average value in the city is now $565,547.

'Previously less desirable areas of Mount Maunganui are also undergoing a real period of gentrification with a number of properties along Maunganui Road south of Golf Road being renovated in the past 12 months,” says QV homevalue Tauranga registered valuer David Hume.

Home values in Tauranga City rose a massive 7.4 per cent over the past three months and they are now 22.3 per cent higher than they were in February last year.

The average value in the city is now $565,547. Western Bay of Plenty home values also continued to accelerate rising 6.9 per cent over the past three months and 13.4 per cent year on year.

The average value in the district is now $484,340.

'The Bay of Plenty market continues to show no signs of slowing, with demand for properties far outstripping supply,” says David.

'The way the top end of the market is continuing to strengthen, characterised by the building activity along Marine Parade at present and reported levels of enquiry from agents active along this strip.

'Given the similarities to the peak of the 2006 – 2007 property market and a reported levelling off in the Auckland, everyone is now starting to ask the question: ‘How long can this period of rapid house price increases be sustained?'”

The latest monthly QV House Price Index shows that nationwide residential property values for February have increased 11.6 per cent over the past year.

Values rose slightly by 0.1 per cent over the past three months and are now 34.3 per cent above the previous market peak of late 2007.

When adjusted for inflation the nationwide annual increase drops slightly to 11.5 per cent and values are now 14.7 per cent above the 2007 peak.

The average value nationwide is now $556,306. The Auckland market has increased 17.8 per cent year on year, but has decreased by 0.7 per cent over the past three months.

Values there are now 69.4 per cent higher than the previous peak of 2007.

When adjusted for inflation values are 17.7 per cent over the past year and are 44.7 per cent above the 2007 peak. The average value in the Auckland region is now $925,656.

'Home values in the main centres are increasing with the exception of Auckland where many areas have seen values decrease over the past three months,” says QV National Spokesperson Andrea Rush.

'There continues to be strong growth in home values in Whangarei, Tauranga, Hamilton, Napier, Wellington and Queenstown. Values in Christchurch and Dunedin are also rising at a more moderate pace.

'Regional areas within commuting distance to Auckland are also still benefiting from buyers looking for more affordable housing or rental property and values are up more than 5 per cent in the Kaipara, Waikato and Hauraki Districts over the past three months.”

The only places which have seen values decrease over the past three months outside of Auckland are Stratford in the North Island and Ashburton, Waimate and the West Coast districts of Buller and Grey in the South Island.

'Listings levels remain low in most parts of the country despite more properties coming onto the market during February,” says Andrew.

'The drop in values in the Auckland region is a continuation of the softening in the market seen late last year when measures to curb investors were introduced.

'However over the past couple of weeks, activity levels have started to pick up across the super city, so it's possible the drop in values may be short lived.”