The median house price in Palmerston North has increased only a flicker in the last month, but competition for houses remains intense, with most selling well above the asking price.

Real Estate Institute of New Zealand figures show prices stalled at $360,000, but local spokesman Andy Stewart said the median had increased to $362,000, even through the median list price was a lower $339,000.

The median house price in the city a year ago was $329,000, a 9.4 per cent annual increase.

Stewart said with only 170 to 190 properties on the market, it had become unusual to put a set price on them, with most buyers and agents using a "buyers from" price guideline.

As an example, a recent house listed at $319,000 sold for $350,000 after multiple offers.

Houses are selling for well above their asking price in Palmerston North.

Warwick Smith/STUFF

Houses are selling for well above their asking price in Palmerston North.

Homes were selling well above their median rating value, which was $265,000 - some $90,000 below actual sales prices.

Stewart said there had been few recent sales at the top of the price range, which made the median price seem relatively modest.

Thirty of the houses sold in July went for less than $300,000, and 62 per cent were under $400,000. There were 25 sales above $500,000.

Houses were selling within about 24 days.

Stewart said there were first-home buyers with pre-approval from their banks struggling to find a property at any price, and people looking to move up to their second or third home were not prepared to market their homes before buying their next one.

"It's a real Catch-22.

"Even those wanting to build face 18-month waiting lists, and unless they are prepared to rent for a couple of years, they won't sell."

In Feilding, 31 houses sold during July, at a median sale price of $305,000.

QV spokesman Jason Hockly said the market was "full steam ahead", with prices likely to rise further during the year.

The challenge of finding a house to buy would only be relieved as more houses, including new houses, came onto the market.

Hockly said the city council had done what it could do boost supply, making it easier for residential properties to have a minor dwelling on the section, and earmarking parts of the city where multi-unit housing was encouraged.

"But the market has been a little slow to respond."

City planner David Murphy said since the review of the residential zone, there had been only one application for a minor dwelling, and none for multi-unit housing.

He said while aspects of the plan change were still under appeal from the Defence Force and Powerco, the changes had not been able to become fully operative.

Once those issues were resolved, the council would step up promotion of the new opportunities for more intensive housing.

"Until we actively communicate with people about what you can do now, it is maybe not surprising that people don't know."