The latest monthly increase means house prices have risen 16.1 percent in a year - the biggest jump since 2006.
Photo: RNZ / Nate McKinnon
CoreLogic's House Price Index - the most complete measure of change in the market - shows nationwide values increased by a further 2.2 percent in March.
Its head of research Nick Goodall told Morning Report he wasn't surprised by the latest figure which continued a pattern that had been building over the last six months.
The March information is the last set of data to be analysed before the new tax changes announced by the government last month kick in.
The reforms include closing a tax loophole, and extending the time investors need to hold on to homes to avoid a tax on their capital gains, calledthe bright-line test.
The change to the bright-line test has already taken effect, meaning people who buy an investment property and sell it within 10 years, will have to pay income tax on any profit made.
From now on Goodall said CoreLogic will be looking to see if there is an effect on the number of house sales and if there is any impact on vendors' price expectations.
In the last couple of months there was "dial-back" from first-home buyers because prices had moved out of their reach despite being able to borrow large sums of money and they couldn't compete with other buyers.
"It was starting to put the squeeze on those first-home buyers."
"They're [investors] still very, very active in the market right up to the latest data we've got" - CoreLogic's head of research Nick Goodall
Mortgaged investors had been very active in the market this year, making up about 30 percent of sales, while first-home buyers made up about 23 percent, Goodall said.
But he was expecting investors' interest to drop from now on because they would find it hard to make the sums work on their current properties.
"They're [investors] still very, very active in the market right up to the latest data we've got.
"... A key question of the future is, what is the demand going to look like for those existing properties that there's a smaller market for now because it's not going to be that beneficial for an investor to buy that property."
Price growth could be seen across the country, apart from Gisborne which has had a drop of 2.4 percent for March - the city had been leading the charge with 30 percent annual growth to the end of February.
He said the government's intention will be that there is more demand and confidence in new builds.
He does not expect house prices to fall in the short-term nor will investors get out of the market.
"But longer term there's still got to be some consideration for what's going to happen with existing property with its value, especially once interest rates rise as well because of course that's going to increase the burden on investors and they're not going to be able to make those sums work to buy existing property any more."