The head of research at property data analysts CoreLogic NZ, Nick Goodall, says tighter bank lending has curbed growth in the housing market over the last few months.
The latest figures from Quotable Value show housing values nationwide growing at just over one per cent in the last three months and at a rate of 7.3 per cent over the past year.
Mr Goodall told Corin Dann in this week's Q+A Business Podcast that while there are factors supporting the housing market like strong net migration, low interest rates and shortages of supply, retail banks are being tougher with their lending and testing customers to ensure they are theoretically able to service a seven per cent interest rate on their mortgage.
That's despite most popular two and three year fixed mortgage rates at the moment sitting around five per cent.
Mr Goodall says the bank serviceability tests are the result of uncertainty about where the market is going, after a period of growth.
He says it means the banks now know they are covered should borrowers roll off their fixed rates in future and face higher interest rate payments.
The Official Cash Rate in New Zealand is currently at 1.75 per cent and is not expected to increase for a year or so.
However the US Federal Reserve has been hiking its benchmark interest rate this year in response to some inflation pressures and it is possible that this could push up longer-term mortgage rates in New Zealand.
Many retail banks here source capital in offshore money markets.