Median house prices across the country rose 5.8 percent to $550,000 at the end of 2017, but economists say lending restrictions and political uncertainty have sapped some heat out of the market.
There were record gains in house prices in Waikato, Bay of Plenty and Wellington. Photo: 123RF
The Real Estate Institute's (REINZ) latest survey indicates house prices were mixed across New Zealand, with half of the regions reporting falls last month, while the volume of sales was also down.
REINZ's house price index fell 0.3 percent in December on November, but rose 3.8 percent on last year.
The seasonally adjusted national median price rose to $550,000 from $520,000 last year.
There were record gains in Waikato, Bay of Plenty and Wellington, with large falls in Gisborne, Northland, Southland and West Coast.
REINZ chief executive Bindi Norwell said the overall number of sales fell more than 10 percent and by nearly 12 percent in Auckland.
"December represented a continuation of the theme we have seen throughout 2017, whereby the number of properties sold across New Zealand decreased every month when compared with the same month in 2016.
"It's a tough comparison, because 2015 and 2016 were very strong years for the industry, and set quite a high bar, so any comparison was always going to be more moderate beside these outlier years," she said.
ASB economist Kim Mundy said bank lending restrictions and election-related uncertainty had sapped a lot of the heat out of the market.
But she said housing shortages and population growth would continue to support the market.
Westpac economist Michael Gordon said prices were expected to fall again once a number of regulatory measures take effect, such as restrictions on foreign purchases.
He said each measure would have only a small impact, but the cumulative impact would be significant.
Meanwhile, the national inventory of houses for sale rose more than 9 percent, led up by a 26 percent increase in Auckland, 21 percent in Wellington and nearly 19 percent in Christchurch.
"Even though Wellington saw one of the biggest increases in inventory, there is still only seven weeks inventory left - the least in the country, which is a pattern the region has been experiencing for some time now," Ms Norwell said.
"Additionally, the Hawke's Bay only has nine weeks' inventory available, highlighting the popularity of the area."