National house price growth slowed 2.3 percentage points last month compared to the latest quarter from May to July, according to the QV House Price Index.
David Nagel, QV general manager, said New Zealand house values which were rising at 6.6 per cent in the three months to June 30 rose only 4.3 per cent in the three months to July 31 and he attributes this to deliberate measures to stop runaway growth.
"Three-monthly value growth has more than halved since April when it was rocketing along at 8.9 per cent," Nagel said today.
The national average house value is $952,078, up 26.4 per cent annually to the end of July.
Auckland house price growth slowed across the region for the third month running, easing to just 0.4 per cent in the month of July. That was a sizeable drop from the 3 per cent and 2.3 per cent growth recorded in April and May, QV said.
Rupert Yortt, a local QV senior consultant, said the Auckland QV consultancy team were noticing that reduced supply levels were continuing to keep the market in a strong position, "although it is certainly not as frenzied as it was in early 2021. Prices being achieved for redevelopment sites are varying with some properties appearing to go for well above expectations."
House values in all 16 urban centres QV tracks had a reduction in three-monthly growth compared to last month.
"After three consecutive reductions, the market is clearly cooling now as a result of Government and Reserve Bank policy initiatives aimed at dampening the enthusiasm of investors. With looming interest rate rises, we'll likely see a continuation of this trend," Nagel said.
Chris Tennent-Brown, a senior wealth economist at ASB, said yesterday every Reserve Bank meeting should now be considered live for Official Cash Rate increases.
"ASB is forecasting the RBNZ to lift the OCR back to its pre-pandemic level of 1 per cent by the end of the year. We then expect more increases, taking the OCR to a peak of 1.5 per cent by late 2022," he said.
"This suggests that mortgage interest rates are likely to move higher at a quicker rate than our earlier forecasts, but still settle at historically low levels," Tennent-Brown said.
"We are past the low point and fixed-term mortgage rates have been lifting. Our forecasts suggest more increases are coming for mortgage rates over the rest of the year."
Housing market figures released by OneRoof.co.nz and its data partner Valocity showed a similar easing in market activity.
While the median property value for the country hit a record high of $791,000 in July - a jump of 21% on July 2020 - house price growth in the three months to end of July slowed to 5.5%, down from 8.2% in the previous quarter, the OneRoof figures showed.
OneRoof editor Owen Vaughan said: "The slowdown suggests that measures taken at the start of the year by the Reserve Bank to take the heat out of the market are starting to work.
"The market slowdown was most pronounced in Auckland, where prices rose just 4.3% in the last three months, but the heat is still evident in Waikato and Manawatu-Whanganui, with both regions enjoying value growth of 7.4% and 6.9%."
Vaughan said the new figures showed that investors were in retreat.
"Investors' share of new mortgage registrations in the three months to the end of June slipped from 22.5% in the previous quarter to just 19% - their lowest share since the national lockdown in April 2020. First-home buyers increased their share slightly from 26.5% to 27.2%," he said.
"It is likely that the 40% deposit requirement for investment purchases has scared off a lot of buyers in this market, with the Government's tax hit on investors and recent rises in interest rates expected to have further cooling effect."
According to QV's figures, the strongest value gains in the past three months were Palmerston North, up 6.7 per cent, followed by Christchurch up 6.3 per cent growth.
None of the major urban areas QV monitors had a decline in average value, but Marlborough had all but flattened out at 0.2 per cent growth, compared to 4.4 per cent three-monthly growth last month.
Central New Zealand has the strongest annual rate of value growth.
The three fastest-growing regions were all in the lower North Island: Manawatu-Whanganui up 38.1 per cent annually, greater Wellington up 34.3 per cent and Hawke's Bay up 31.8 per cent.
The three lowest annual growth rates are all in the South Island with the Southland region experiencing a still-significant 19.4 per cent increase, with Otago showing 21.6 per cent and Tasman at 22.9 per cent annual growth.
Tauranga prices cooled "significantly" last month, dropping from 2.1 per cent growth in June to 0.3 per cent in July. Over the same period, the city's three-month rolling average also dropped from 8.3 per cent to 5.4 per cent, QV said.
Hamilton average house prices increased by 1.7 per cent in July, up from 1.2 per cent in June to $834,305.
Rotorua values were "cooling rapidly", according to QV property consultant Derek Turnwald. Values only increased by 3.1 per cent in the three months to the end of July which was less than half as much as the three months prior at 7.6 per cent.
Taranaki house prices rose 4.6 per cent in July, compared to the three-month rolling average of 6.3 per cent, QV said.
Earlier this month, the Reserve Bank said it would soon begin consulting on ways to tighten mortgage lending standards.
Deputy Governor and General Manager for Financial Stability Geoff Bascand said it was focused on ensuring borrowers were resilient to a range of future economic and financial conditions.
"We are particularly concerned about those who have borrowed in the past 12 months at high LVRs and high DTIs," he said.
"If house prices were to fall, some buyers could face the possibility of negative equity – which means the value of their property is below the outstanding balance on their mortgage," Bascand said.
"We've already made adjustments to LVR restrictions to partially manage this risk, but we haven't seen a sufficient reduction in risky lending."
To prevent the problem from getting worse, it would look to further reduce the amount of high LVR lending to owner-occupiers.
"We propose to restrict the amount of lending banks can do above an LVR of 80 per cent to 10 per cent of all new loans, down from 20 per cent at present. We will begin consulting on this change later this month with a view to introducing it from October 1," he said.