An undersupply of housing in Auckland is helping push prices to new highs, but isn't triggering the building rush needed to address the imbalance.
While building consent numbers are on the rise, they are well short of the numbers seen before the global financial crisis.
House sales have jumped this year, while the median sale price has risen to a new record high of $372,000.
Registered Master Builders Federation chief executive Warwick Quinn says Auckland and Christchurch have been largely responsible and a building boom is not on the cards, except potentially in Christchurch because of the rebuild.
"It's more likely to be a gradual reflection of the wider housing market as that responds".
He says Auckland is likely to have a level of activity first given that it is the only city that potentially has a housing shortage of any size and that could be 5000 to 10,000 properties.
Mr Quinn says the rest of New Zealand is still reasonably level and there was never an under or over supply.
Auckland Council agrees the city needs more houses and puts the number at about 13,000 a year over the next 30 years.
But Signature Homes executive director Gavin Hunt says builders and developers are taking a cautious approach, largely focussing on one-off build-to-order homes, rather than speculative developments.
He says building one home ties up $600,000 to $700,000 which makes it very hard for the average builder to build and hold a lot of houses in speculative developments.
And Mr Hunt says buyers are reluctant to commission those one-off houses, especially with land prices so high.
He says with a small section in a good location in Auckland costing around $400,000, even building a house for $250,000 - $300,000, means paying around $750,000 for a very modest home.
The number of building consents issued this year is almost 40% lower than the same period in 2007.
In Auckland, it's about 25% lower.
But BNZ chief economist Tony Alexander says numbers are bouncing back.
"If you look at the number of consents issued in Auckland for the three months to May, the rise is approximately 55% from a year earlier, which is even greater than the increase for Canterbury over the same period of 45%".
Mr Alexander says with the demand for houses rising, something has to give and eventually people will pay the higher prices for sections and construction will come forward.
Mr Alexander expects demand for housing to stay strong, especially if mortgage interest rates stay low.
