Rotorua house sales are down almost a fifth on the same time last year, figures show.
However sales in the city during July had jumped to 72, up from 53 in June this year.
Latest Real Estate Institute of New Zealand (REINZ) figures show the number of house sales in July were down almost 18 per cent - from 88 to 72 - year-on-year while the median house price slipped $4700 to $250,000 compared with the previous July.
LJ Hooker Rotorua agent Stephen Pepper said investor interest had waned in Rotorua properties in recent months.
"It's over uncertainty in the economy at the moment, which is crazy because some of the returns people are getting on investment properties in Rotorua are some of the best in the country.
"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."