Auckland's property market is continuing to cool dramatically, with sales for July down 30.6 percent on the same month last year.
Photo: RNZ / Cole Eastham-Farrelly
The latest statistics from the Real Estate Institute (REINZ) also show a significant fall in house sales nationally, which have dropped by 24.5 percent.
The fall represents the lowest number of properties sold in a non-Christmas month since August 2014.
Overall, house prices dipped 2.1 percent in Auckland in July, compared to the same month last year.
The REINZ index showed nationwide house prices were up 1.2 percent in July. Excluding Auckland, national values rose by 7.5 percent.
The institute said tougher lending rules were to blame for much of the fall.
It said strict loan-to-value ratios (LVR) had done their job of cooling the market, but now they were now going too far.
REINZ Chief Executive Bindi Norwell said the LVR ratios created an intimidating barrier to entry, particularly for those saving for their first home.
"The LVR restrictions have done their job of slowing the market, but now it seems they are acting as a handbrake which is why REINZ is calling for LVRs to be reviewed for first time buyers," Ms Norwell.
"Nearly every agent we speak to is telling us that first-home buyers are really struggling with those LVR restrictions."
First home buyers were also facing tighter lending criteria from their banks. Ms Norwell said banks had their own business decisions to make, but they should be trying to make things easier for those looking for their first home.
"I hear of things that they are doing to try and help first home buyers, it's not all doom and gloom. I think that the more that they can do to facilitate that - support first home buyers so that they're not too highly leveraged, but they have got access to funding - would be a good thing."
ASB economist Kim Mundy said there was not much chance the Reserve Bank would take another look at the restrictions.
"They are still quite concerned that housing market activity could pick up again at any stage, just given the high levels of population growth and the fact that supply is still, on balance, short. So the Reserve Bank is going to want to wait to make sure the market really has cooled down before it makes any changes."
Ms Nowell said the wet weather and school holidays in July would also have brought down the number of sales.
Mike Robson, a salesperson with Harcourts in Mount Eden, said the property market always had its ups and downs, but it was definitely slowing at the moment.
"Definitely some aren't selling under the hammer like they were, and I think buyers have got the feeling that if they wait and negotiate, they might be able to get a better deal. So there is a bit of that going on."
Mr Robson said people were not rushing out to buy houses, just to get on the property ladder.
He said buyers were getting a bit pickier - and sellers were having to up their game.
"Sometimes it's aspect, sometimes the back yard is too small or the flow inside is not what people are wanting, or seeking. So those properties tend to sit a little bit longer. But now we're going through that area where the vendors or owners of the property are having to meet the market demand, or the perception of where the buyers are seeing value, or they hold onto the property longer and they stay where they are."