Auckland house sale volumes fell 7.5 per cent last month and the average selling price fell by 1.1 per cent to $711,768, says real estate firm Barfoot & Thompson.
Peter Thompson, managing director, has just announced results from last month and blamed the election which he said had put the market into a wait and see mode.
"With new listings for the month at 1129 - a decline of 19.1 per cent on those for July - August was a quiet month in terms of activity," he said.
"This was not unexpected as the market invariably goes quiet in the build-up to general elections.
"Buying or selling a house represents a major financial decision, and without certainty people put that decision on hold. "It means the normal lift in market activity we see with the approach of spring is still some weeks off.
"Certainty will return post the election, and the final three months of the year are likely to see greater activity than normal as the regular five-month spring/summer pre-Christmas season is compressed into three months of trading.
Westpac Bank senior economist Michael Gordon said his seasonally adjusted stats showed another small drop in house sales last month.
"There was an even greater slowdown in the flow of new listings, which meant that the stock of unsold homes fell slightly," he said. "However, house prices remained robust in August, with the average sale price up 10 per cent on a year ago, the same annual pace as in July."
"It's possible that the housing market is facing pre-election jitters; it's also possible that homeowners have been holding back while they await the updated council valuations (it's hard to separate the two as they occur around the same time every three years)."
Peter Thompson said new listings for the month were the lowest since December 2013, and the lowest in an August for four years.
"The same trend was there for sales numbers, with August's sales being the lowest for four months, and the lowest in an August for three years," he said. "The average sales price was stable, and has moved around in a $17,000 band between $719,000 and $702,000 for five months.
"During the month, the busiest sector of the market was for homes selling for under $500,000.
"A third (33.4 per cent) of all the homes sold in August were for less than $500,000, an increase of 5.2 per cent over the number sold in July.
"Sales in the million-dollar-plus price segment fell 11.8 per cent in the month to 149, the lowest for four months," he said.
ASB Bank senior economist Chris Tennent-Brown said he now expected the Reserve Bank to leave interest rates on hold until March next year.
"There are a number of uncertainties for buyers to consider at present: the tightness of the housing market does appear to be easing slightly; the RBNZ has signalled a pause after four OCR increases; and the General Election is just around the corner," said Tennent-Brown.
"We expect the RBNZ to remain on hold until March 2015. The market has also pared back expectations of future rate hikes. This local development, combined with bank competition and falling long-term rates globally has created an environment where term mortgage rates are under downward pressure, particularly 1-2 year terms," he said.
"Whether the dynamics in the mortgage market stimulate buyers over the coming months remains to be seen. Housing activity is typically down in the winter months, and steps up significantly around October. The extent of the seasonal acceleration over the coming months will be important to monitor, and will influence how comfortable the RBNZ will be on the interest rates side-lines."
Tennent Brown said picking the direction of the housing market over the coming year or two was difficult.
"We have very strong migration inflows (particularly in Auckland) and a level of supply that has risen only marginally since mid-2013. In addition, LVR restrictions are having an impact on activity. The RBNZ has been lifting the OCR in 2014, but some term mortgages are actually lower now than back in March when the RBNZ began its tightening cycle."
On balance, he expected house prices to continue rising in Auckland (and Canterbury), but not at the pace seen over 2012-13.
"Demand is unlikely to drop off significantly while migration is so strong and fixed-term mortgage rates remain lower than the RBNZ might like due largely to offshore factors. But affordability is getting very stretched because of the price gains over recent years. A period of modest price appreciation appears likely, as incomes catch up with prices over the coming years."