"I think people have held back for a long time, Rotorua's been depressed for five years or so.
"They can see it starting to move in that range so [think it's] better to get into it and buy now because prices will go up."
Mr McDowell said Rotorua's "up and down" sales figures did not reflect a trend of ongoing growth in the market.
"It's pretty frustrating really.
"In reality the sales for the first six months of this year were exactly the same as the first six months of last year."
The cheapest area to buy a house in Rotorua for the quarter ending June 30 was Fordlands, with a median house price of $123,500, while the most expensive area was Lynmore at $387,000.
Mr McDowell said most Fordlands buyers were investors looking for a good return.
In contrast, Lynmore was attracting businesspeople looking to get into the market before interest rates rose, and was the area pushing up the recent average sale prices.
The average asking price for Bay of Plenty increased 3 per cent during August to $441,864, according to realestate.co.nz.
Real Estate Institute of New Zealand chief executive Helen O'Sullivan said the regional markets were starting to reflect some of Auckland and Christchurch's rising prices, but not to the same degree.
"Some areas, in particular the regional areas, are still some distance away from that level of activity and in fact away from their 2007 peak.
"The housing market outside of Auckland and Christchurch is ticking along and doing ok, but I wouldn't call any of the markets outside of those two areas overheated."
Imminent Reserve Bank lending restrictions, which will limit lending on home loan deposits less than 20 per cent, should not have been applied nationwide, she said.
"It's creating, potentially, a barrier for people outside [Auckland and Christchurch] and based on the state of the market probably isn't really necessary."
The Property Report showed the most expensive suburbs in New Zealand were all in Auckland, with average prices ranging between $1.2 million and $1.7 million for a property on the city centre fringe.