Momentum in the Auckland property market appears to have stalled, with Barfoot and Thompson reporting another month of flat prices.

"The average sales price in May was $644,737, up less than $2000 on the figure for April and down less than $1500 on March," said Peter Thompson, managing director of Auckland's biggest real estate company in a statement issued this morning.

Average sale prices fell in April by about 0.5 per cent to $643,089.

"The upward price momentum that started in October 2012 has stalled," said Thompson. "While realistically priced properties still continue to sell almost as soon as they come on the market, there is resistance to going above current values.


Thompson said that rather than experiencing "runaway prices" , the Auckland property market had come out of the other side of "a period of price rebalancing" caused by five years of modest price growth.

New Zealand Reserve Bank Governor Graeme Wheeler has been looking at ways to cool Auckland's overheated housing market without hurting the productive economy. Wheeler may use new macro prudential tools this year to limit low equity loans in an attempt to dampen demand. Economists expect he will also raise interest rates, which could increase demand for the kiwi dollar and hurt local manufacturers.

Westpac Bank economist Michael Gordon said he expected nationwide house prices to rise 9.5 per cent this year, and a further 7.5 per cent next year.

"Notably, the Reserve Bank's house price forecasts are not too dissimilar from ours. The point of difference is that the Reserve Bank expects the knock-on effects from house prices to household spending and inflation pressures to be more muted compared to past cycles. We're not convinced that this time will be different, and we maintain our view that higher interest rates will be needed from next year."

Gordon said that Auckland house sales had "been broadly flat since the start of this year, and are still below the peaks reached late last year."

"We suspect that this reflects a lack of supply rather than a cooling in demand. While there has been some pickup in new listings since the lows of 2011, it has been insufficient to keep up with demand. As a result, the total number of available listings has continued to plunge - it's now equivalent to just 2.8 months' worth of sales, the lowest ratio on record going back to 1998."

Gordon said it was plausible that the lack of supply was now constraining the number of sales. This also happened during the middle phase of the last housing boom - sales slowed sharply from 2004 to 2006 as the number of listings hit its lows, while prices continued to squeeze higher.

"May's average price is 10.7 per cent ahead of the average price in May last year. While some properties sell well above their CVs, they are the exception and there are often valid reasons for the price differential," said Barfoot and Thompson's Peter Thompson.

"The median sales price in May of $570,000 confirms the same trend shown in the average sales price."

Thompson said there was little change in the number of properties being sold in May, or the speed in which they sold.

In May the company sold 1284 properties, 20.9 per cent more than in April and 10.2 per cent more than in May last year. New listings at 1315 were the lowest for four months, and down 14.2 per cent on those for April.

"Auckland remains a market where there are too many people chasing too few properties, and until there is an increase in the number of properties buyers will remain frustrated at the limited choice available," said Thompson.

During May 144 properties sold for in excess of $1 million. A further 519 properties sold for less than $500,000.