Tauranga house prices rose four per cent in the last year, but they still have a way to go before they regain the 2007 peak before the Global Financial Crisis, reports Quotable Value NZ.

The current average Tauranga house price is $442,061, still 8.2 per cent shy of the 2007 peak, reports QV research director Jonno Ingerson.

The local lift is part of a nationwide trend. Values are up three per cent over the past three months, 10 per cent up over the past year, and 12.5 per cent above the previous market peak of late 2007.

'Nationwide values increased steadily throughout 2013, with the year ending 10 per cent above the previous year. As was the case in 2012, most of the nationwide increase in value was driven by strong increases in Auckland, and to a lesser extent Christchurch.”

'Sales volumes each month up until October were also higher than the same month in 2012 by between five per cent and 18 per cent.

'This represented an increase in activity but this was still well below the level of sales seen in 2003 to 2007, and is only just getting back to a long term average level. Like property values, this sales turnover was also stronger in Auckland than the other main centres.”

The Reserve Bank implemented what are known as LVR speed limits on October 1, to combat concerns about the real estate market overheating and the possible impact on the economy if it burst. The loan to value ratio limits imposed on the main banks mean that potential buyers need to have at least a 20 per cent deposit.

This has had an immediate impact on activity. Sales slowed down and the number of new listings followed suit.

'As yet there appears to have been no impact on values, although it is really too early to expect dramatic change,” says Jonno.

A comparison of the main centres shows how much the nationwide annual increase of 10 per cent is pushed up by Auckland and Christchurch, says Jonno.

From the North Shore to Manukau values increased between 15 per cent and 18 per cent annually. Values in Christchurch went up 12.7 per cent.

By contrast, other main centres including Tauranga increased between 2.5 per cent and four per cent. Hamilton was slightly higher at 5.8 per cent.

'Considering values in Auckland have been increasing since early 2011 it's not surprising they are now 27 per cent above the previous 2007 market peak,” says Jonno.

'Likewise values in Christchurch are 20 per cent above the previous peak.

'Tauranga remains 8.2 per cent below peak, while the Wellington area, Hamilton and Dunedin are just above or below previous peak levels.”

Provincial centres show less of a clear trend. Apart from Wanganui and Invercargill, all the provincial centres increased during 2013, but the increases were less than five per cent. The exceptions are Gisborne which increased by 5.5 per cent, and New Plymouth 7.3 per cent.

Compared to 2012, sales volumes dropped in many of the provincial centres by a few per cent, says Jonno. The exceptions are Whangarei, New Plymouth and Nelson where sales were well above the year before.

In the year ahead Jonno says the LVR speed limits are likely to have an impact on the market for at least the first half of 2014. The first sign of that impact so far is a decline in the number of new listings, says Jonno.

'The impact of the speed limits is likely to differ across the country. Auckland values are expected to keep increasing throughout the year as both internal and external migration boosts the population, while the supply of housing remains tight. This strong demand and low supply is likely to keep pushing values up, although the rate of increase will probably be less than the previous year.”

There were signs in November/December that values in Christchurch and the surrounding areas may be faltering.

'In a few months from now we should be able to tell whether this was due to the LVR speed limits having a temporary influence, or whether values in Canterbury have reached their ceiling.”

Across the rest of the country it's likely the LVR caps will have a downward impact on property turnover and values. There isn't the same imbalance of supply and demand outside of Auckland and Canterbury, and there generally aren't multiple purchasers vying for the same property, so the LVR speed limits are likely to significantly decrease demand and therefore prices, says Jonno.

'The other big influence on the property market this year is going to be the upcoming increase in mortgage interest rates. The last two or three years have been characterised by historically low interest rates which have encouraged people into the market.

'As rates rise later this year as they are expected to, this will increase the cost of servicing mortgages which in turn will lead to people borrowing less and therefore offering less for properties.”

The potential downward forces are countered by increasing levels of business and consumer confidence, particularly in the big cities. Consumer confidence in particular is a strong driver of the property market.

'Nationwide values are likely to increase only modestly this year, but that will probably be as a result of everywhere outside of Auckland slowing while the Auckland market itself will continue to increase.”