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House prices continue to rise, but signs market slowdown may be on the way

Latest data shows New Zealand still desperately needs more houses to be built, as property values continue to soar around the country.

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Measures introduced by the Government are aimed at slowing the market. Source: 1 NEWS

Auckland's property values rose by 2.4 per cent in April, taking the average value to $1.25 million, nearly a 16 per cent increase in the past year.

But that number was even higher in some of the nation's other major centres.

In Hamilton, annual growth is now 20 per cent, with a house now costing $760,000, while in Tauranga, a 19 per cent rise sees an average house setting back buyers over $900,000.

House prices are dangerously close to surpassing the million dollar mark in Wellington, with 23 per cent growth.

Numbers are much better in the south, with the average house price in Christchurch just under $600,000, and around $635,000 in Dunedin.

However, there are signs of change in the overheated market, with investors selling up or sitting back.

"A property manager who told me that they have actually in the last two weeks had to lay off two of their five staff just from the reduction in numbers of properties they've been managing," Auckland Property Investors Association president Kristin Sutherland told 1 NEWS.

In March, the Government announced an extension to the brightline test and plans to gradually remove mortgage interest deductibility for investors.

While today's April house price data shows no signs of cooling, there are signs that frenzied pace of growth may be slowing.

"The key things we're looking at is activity - how many people are going to the bank to ask for a mortgage - and that's supported by valuations that are ordered. When you look at the last month, it's about 11 per cent down on those previous six months," Corelogic's Nick Goodall said.

Sales to first home buyers in 2021 have dropped to 24 per cent, from its peak of 29 per cent last year.

Tomorrow the Reserve Bank will release its assessment of the economy and that may include details about further restrictions on investors.