Auckland's cooling housing market will provide little relief for first home-buyers as interest rates are tipped to rise, amid an estimated 40,000 property shortfall, a New Zealand property expert says.

Property Institute of New Zealand chief executive Ashley Church said the easing of prices was "unlikely to bring much relief to first-home buyers" and would make the housing supply problem in Auckland worse.

"Although rising house prices have been a problem - the lower cost of borrowing has meant that some first-home buyers could still enter the market. That small advantage will now be largely offset by rising interest rates, which will also start to quickly erode the amounts that banks are prepared to lend to those borrowers."

He believed diverting investors into building new properties was the key to alleviating the city's shortage of affordable homes.

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"Auckland still needs over 40,000 new houses and we've long been of the view that the way to get those built quickly was to divert property investors away from existing dwellings and into investing in new homes."

Church's comments were in response to ANZ chief economist Cameron Bagrie, who this week told Fairfax that as prices eased in the country's biggest city, interest rates would do the opposite.

Bagrie didn't exclude the impact of the housing shortage on the market, but said interest rates were the largest driver of property prices and would continue to be.

Church said he didn't disagree, but he felt the market cooling, along with the rising interest rates and higher borrowing costs wasn't good news.

"The Reserve Bank loan-to-value restrictions have been slowing the market for some time - and it's entirely possible that rising interest rates will consolidate that slow-down and reduce price pressure by scaring some people out of the market - particularly those who were chasing capital growth, such as property investors."

Church said there was some debate over the extent to which investors have been a factor in the Auckland property market - figures range from 25 per cent to 45 per cent - but their impact on the market was significant.

"Depending on which figure you believe - property investors have represented between a quarter and almost half of the market.

"With the right incentives, those are people who could have been diverted into investment in new dwellings - but instead, most of them will now disappear from the market."

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However, new figures released by CoreLogic on the weekend showed investor activity on existing homes remained strong, with 44 per cent of all houses sold in the first month of the year sold to investors. Only 19 per cent were bought by first-home buyers.

It was a similar trend across New Zealand as the number of first-home buyers dropped to 20 per cent compared to previous months and the number of investors rose to 39 per cent nationwide.

Meanwhile, Crockers Property's monthly report out today showed "most investors expect the Government to impose additional measures to slow the housing market over the next year".

Interest rate increases were expected by 46 per cent of those surveyed by independent market research firm Ipsos, on behalf of Crockers.

And despite the commentary indicating property prices in the SuperCity were easing, it seemed few actually expected house prices to fall; 15 per cent thought prices would drop by 5 per cent and nine per cent thought it could drop by more than 5 per cent.

Church said the cooling market, combined with the rising interest rates and higher borrowing costs, wasn't good news for the market.