The July data from REINZ shows that national sales volumes fell by almost a quarter (23.9%) year-on-year and by 3.3% on June, once seasonally adjusted.

This represents the lowest number of properties sold nationally I n a non-Christmas month (December/January) since August 2014.

At the same time, Auckland, which has long been a key driver for the national market, saw sales volumes decline by 29.9% year-on-year and by 2.2% on June, once seasonally adjusted.

REINZ chief executive Bindi Norwell said the number of sales across New Zealand has dropped significantly in comparison to the same time last year.

A key reason for this is that the two biggest hurdles to purchasing a house right now are access to finance as the banks continue to tighten their lending criteria and LVR restrictions, she said.

“This creates an intimidating barrier to entry to the real estate market, particularly for those saving for their first home.

“No matter where we are in the country, agents tell us that there are a good number of buyers out there, but that these two issues are impacting both investors and first-time buyers alike.”

Throw in an election, winter, school holidays and one of the wettest Julys on record, it’s little wonder the number of properties sold last month fell so significantly, Norwell said.

“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.”

However, REINZ’s pleas for changes to the LVRs seem likely to fall on deaf ears at the Reserve Bank.

In the press conference accompanying outgoing Reserve Bank governor Graeme Wheeler’s last OCR announcement on Thursday, Wheeler made it very clear that the Reserve Bank was pleased with the cooling effect the LVRs have had on the market.

A major reason for this is that house price growth has slowed markedly.

Wheeler said that national house price growth has now slowed to around 2.8% annually.

Within this, Auckland house price growth is falling by around 1% on an annual basis but, around the rest of the country, house price growth is running at round 9% - although it is falling.

REINZ’s July house price data presents a similar story.

Once seasonally adjusted, the national median price was up by 3.3% year-on-year to come in at $518,000, as compared to $501,000 in July 2016.

Excluding Auckland, the national median price, once seasonally adjusted, increased by 6.2% year-on-year to $415,838.

But the national median price was down – with and without Auckland included – on last month (by 2.3% and 3.3% respectively).

Auckland’s median house price was down by 0.8% year-on-year, once seasonally adjusted, to $830,000. It was down by 2.4% on June.

Alongside Auckland, three other regions saw a year-on-year decline in median house prices. They were Bay of Plenty (down 1.2% to $489,000), West Coast (down 23.5% to $195,000) and Canterbury (down 2.3% to $420,000).

Conversely, four regions saw record median prices year-on-year. They were Northland (up 23% to $455,000), Hawke’s Bay (up 25.8% to $400,000), Nelson (up 20.2% to $493,000) and Otago up (15.3% to $400,000).

Norwell said the fact that most of the country saw price rises shows that demand is still strong across significant portions of the country.

“Most notably this growth is seen in provincial towns rather than the bigger cities – much of which can still be attributed to people looking to exit the bigger cities for more affordable and relaxed lifestyles.”

She added that although Auckland’s median house price has fallen slightly, the housing shortage coupled with the increased population growth means the city is likely to be protected from significant price decreases in the short term.

ASB economist Kim Mundy said while the REINZ data shows the housing market is continuing to cool, it also suggests that a degree of demand remains present in the market.

“As a result, some of the weakness in the sales activity data may be being driven by a lack of inventory.

“But we expect to see activity and price growth remain subdued over 2017, especially in Auckland where prices are most stretched. “

For Westpac senior economist Michael Gordon, the ongoing weakening of the housing market is not just due to the impact of the LVRs.

The rise in mortgage rates since late 2016, following two years of steady declines, appears to have had a significant dampening effect on the housing market, he said.

“We expect the rise in mortgage rates to persist, as they are the product of factors that are beyond the control of domestic monetary policy.

“That points to the housing market remaining very soft over the next year or two.”