Tauranga house sales have dropped 26 per cent and first-home buyers only make up 14 per cent of the market, new figures show.
Data from CoreLogic shows in the 12 months to the end of July there were 3,608 house sales down from 4,883 sales over the same time frames to July 2016.
Senior research analyst Nick Goodall said the recent slowdown was a reflection of ''unsustainable'' increased growth.
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Sales volumes had dropped significantly due to a multitude of factors, including the latest LVR restrictions, banks tightening lending standards and slightly higher interest rates.
Growth in previous years had been driven by low-interest rates, strong population growth and a healthy economy, he said.
''Population growth in Tauranga, while still increasing, has slowed down and the labour market is also showing signs of slowing as well with less growth.''
But consumer confidence in the region was still very positive, he said.
Statistics also showed only 14 per cent of sales in Tauranga went to first home buyers.
''Across the other main centres, this is over 20 per cent and even closer to 30 per cent in Wellington.''
''I think it's a reflection of the demographics. There is a relatively higher average age, which means more movers (next home buyers). We see a similar share in Kapiti Coast for example - another location with an older demographic.''
Priority One projects manager Annie Hill said a key component in making housing more affordable was to pay higher salaries and wages.
From an economic development perspective, it was more important house prices remained affordable, she said.
''With the business and job growth, we are seeing the local job market move to one that is increasingly based on knowledge industries in terms of investment in research and development and more technologically-focused companies.''
''These types of businesses are offering higher value jobs related to the growth of innovation and entrepreneurialism, as well as the professional services that support these industries.''
House sales levelling off creates a more realistic and sustainable property market, she said.
''So the dip in house sales is not necessarily a bad thing. If house prices continued to grow as quickly as they have over the last few years, it would result in employers having even more difficulty employing both skilled and unskilled staff than they already do, causing their businesses to operate at less than maximum capacity.''
Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said the market was back to ''normal'' and where it was in 2014 and 2015 before the market took off.
''We've seen a huge growth in section sales, new builds, speculators, investors and new people arriving and the build-up of first home buyers has all had a part to play.''
Investors and second home buyers were a significant part of the market and had dropped away following LVR restrictions, he said.
''So now what we are seeing is the top end of the market is busy with properties at the Mount and lifestyle blocks which suggests there is still a lot of money in the economy.''
First National, Mt, Tauranga and Omokoroa owner Anton Jones said there were ''no alarm bells ringing''.
''We are still getting a good number of sales, listings and buyers plus we've had some multi and cash unconditional offers. It really depends on the individual property and if the vendor sets a realistic price.''
First home buyers could still get on to the property ladder even though it could take longer to save the deposit, although it was not for everybody.
''While home ownership is all very fine, sometimes it can create its own problems and cost more. It depends on your philosophy, what you want to do and your stage of life.
''There is pros and cons to both owning and renting.''
Tauranga Harcourts managing director Simon Martin said the market had picked up from an incredibly low base from the peak in 2015/16.
But if you went back to 2003 the market was no where close to those volumes, he said.
''I don't believe it was unsustainable ... to have it drop it off to where it is now, is well below what should be the case.''
Tauranga house sales 12 months to the end of July
2017 - 3,608 sales
2016 - 4,883 sales
2015 - 4,179 sales
2014 - 3,321 sales - source CoreLogic
Own home out of reach
Claire McCracken says it could take years before her family can afford their own home - despite building up a deposit and saving $150 per week towards their dream.
The qualified teacher works partime as a home based educator so she can look after her son while husband James had recently qualified as a boat builder.
''I did my teaching degree then I had Korban and had to weigh up if it was worth going back to work as daycare fees are so high,'' Mrs McCracken said.
''Disheartening and depressing'' was how the 28-year-old described their quest to get on the property ladder.
The couple had $20,000 in savings and another $18,000 in Mr McCracken's KiwiSaver but she estimated they would need $50,000 to buy a $350,000 home - ''if we are lucky''.
''In Tauranga, you need such a huge deposit as the house prices are so high. It's quite disheartening knowing we are saving everything we can but we're still three years off buying... you just can't get ahead.''
''We can afford the mortgage repayments, it's having the deposit to get in there that really sucks.''
