The national average house price has risen to $920,000.

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The rate of increase in house prices is gradually slowing as measures designed to slow the rapid growth take effect.

According to the CoreLogic House Price Index, nationwide values rose 1.8 percent in July, matching the rate of growth seen in June but falling short of the levels seen earlier this year.

In the year to July, national average property values increased by nearly 25%, bringing the average house price to more than $920,000.

The total value of New Zealand’s residential property had surpassed $1.54 trillion.

“The exceptional rate of growth witnessed following the economic recovery after the pandemic-induced lockdown was not sustainable,” CoreLogic head of research Nick Goodall said.

He said tax changes, tighter lending rules for property investors and the fact that there was fewer houses to buy was starting to take some of the heat out of the market.

Analysing the HPI on a quarterly basis, value growth nationwide had fallen from 7.2 percent in the three months to June, to 5.9 percent in the July quarter.

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“Despite some investors unable or unwilling to remain active in the market, a strong pipeline of equity-rich investors, previously unsuccessful first home buyers and other owner occupiers who remained patient are now taking this opportunity to seize on low interest rates before they lift any further,” he said.

Last month, a tightening labour market and higher consumer prices pushed inflation above the Reserve Bank’s target range, increasing the likelihood that the RBNZ will begin raising official interest rates at its next monetary policy meeting.

Because the cost of servicing a mortgage would rise, this was expected to dampen demand in the housing market.

“With the market still growing, albeit at a slower pace, this may give the RBNZ a level of comfort to lift the OCR without major concern of it having too negative an effect on values,” Goodall said.

Property values continued to rise in all major cities, with Christchurch and Auckland recording the highest monthly increases of 2.1 percent each.

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On the other end of the spectrum, Hamilton house prices increased by only a half-percentage point.

In comparison to other centres, Rotorua saw a 3.3 percent drop in values in July, after a 21 percent increase over the previous year.

Property values on the Kapiti Coast fell 0.2 percent.

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