High prices, higher deposits, finance constraints and lending tightening has seen the number of houses sold in 2017 plummet.
The latest data from Quotable Value (QV) showed year-on-year, the volume of houses sold was down every month in 2017, with numbers down by more than twenty per cent in February and October.
"The frenzy in the market of the previous three years induced by high numbers of investors in the market subsided and we saw a return to more normal levels of activity around the country," said QV national spokesperson Andrea Rush.
Despite the slow-down in sales, property values continued to rise, although at a slower rate than in previous years.
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Nationwide, average residential property values increased by 6.6 per cent or $41,660 over the year, with the average house price $669,565 in December.
Rush said the slowing in the growth rate was due to new Loan to Value Ratio (LVR) restrictions requiring a 40 per cent deposit from investors, as well as stricter bank lending and uncertainty ahead of the election.
"By October nationwide annual value growth had slowed to 3.9 per cent, the lowest rate of growth seen in five years," she said.
"For the Auckland Region it slowed to -0.6 per cent, the slowest annual rate of growth seen there since 2011."
"The usual annual spring surge was very slow to arrive and listing levels and market activity did not pick up until November and December and this can be seen in both sales volumes and value growth recovering in the last two months of the year."
Easing in LVR restrictions due this month would likely help improve market activity through the summer months, although the slower growth rate trend was likely to continue, Rush said.
Over the year, the Napier and Hastings regions saw the biggest rise in average house prices, up 15.1 and 14.9 per cent respectively.
The only region where prices fell was Christchurch, with the average price falling 0.1 per cent to $493,706.
According to Rush, regional centres were likely to continue to see stronger value growth in 2018, compared with some of the main centres.
In Auckland, average house prices increased just 0.4 per cent or $4,583 for the year to $1.05 million.
Of the suburbs, Auckland City - Islands saw the biggest growth increase with the Waiheke Island market driving growth up 13.7 per cent for the year, and 6.6 per cent over the final quarter of the year.
QV Wellington senior consultant David Cornford said first home buyers had a strong presence in the Wellington market last year, although year-on-year values growth was slow compared to 2016.
"Value growth took a breather over the winter months and during the build up to the election, however by mid spring market activity had started to pick up and value growth continued," Cornford said.
"A shortage of stock, low interest rates and a relatively strong local economy continues to support a robust property market in the Wellington region."
Average values across the wider Wellington Region rose 9.4 per cent to $628,450 by the end of 2017.
