"Investors going a bit quiet on us has taken a good chunk out of the market that's for sure."
And while rising interest rates usually pushed people into action, this time around the hikes had failed to move the market.
However, Mr Pepper predicted a shortage of listings over winter would prompt a surge in spring.
Harcourts Rotorua agent Hielke Oppers said the increased volume in July suggested a return to the normal monthly number of sales.
"We had very slow sales for whatever reason in May and June compared to previous years," Mr Oppers said. "It's pleasing it has picked up again for July and back to normal, 70 to 80 sales a month."
Banks and other agencies were making it easier with opportunities for first-home buyers to meet the lending restrictions, he said.
"Twelve months ago, first-home buyers I was working with were giving up because it was too hard. Now there's a better understanding in the market on how they can achieve their aims and get around the restrictions through the Welcome Home loan scheme and KiwiSaver.
'When these and other options are put together, it's possible to meet the gap to reach the 20 per cent deposit required."
The number of houses sold nationally in July fell 13 per cent compared with the same time last year, to 5893, but was up 2.3 per cent from June.
July's national median price rose 8.1 per cent - $31,000 - from the previous July to $416,000, but was 2.6 per cent lower than in June.
REINZ chief executive Helen O'Sullivan said Reserve Bank measures and the upcoming election were influencing buyer behaviour. "Reports on the effects of the LVR restrictions continue, particularly from the regions, where the reported lack of able buyers is filtering up the price points and on to vendor behaviour," she said.
"It's worth noting Auckland and Canterbury/Westland accounted for more than 100 per cent of the increase in the national median price ... a further indication that the 'national price' is being driven by these two regions."