REINZ data for June shows a 0.8% increase in prices month-on-month, a fall from the average 2.7% in the previous seven months, but a continuation of the runaway market.
Seasonally adjusted sales were 7% up in June, according to REINZ's latest report, published this morning. The number of sales dropped to 8,000 last month, down from the 10,000 at the end of 2020.
Kiwibank economists said the Government's housing policy changes had had a "muted" effect so far.
"From here, house price growth should slow," said the bank's senior economist Jeremy Couchman. "Mortgage rate rises look to be on the cards sooner than previously thought. The case for the RBNZ to start hiking the OCR in 2021 is becoming apparent."
Westpac acting chief economist Michael Gordon said loan-to-value ratio restrictions had contributed to "some cooling off of demand for investment properties, although the evidence to date suggests that homebuyers have been quite willing to step into the breach".
Gordon added: "That could change once mortgage rates – in particular the popular one and two-year fixed rates – start to rise from their lows, as the prospect of OCR hikes comes onto the horizon."
With house prices continuing to rise, and inflation figures expected to show a significant increase later this week, markets are betting on higher interest rates in the months to come.
The wholesale interest rates market gives a 90% probability of OCR increases in November, with four 25 basis point rate hikes to 1.25% by mid 2023.