National property values continued to surge in April but there's some suggestion activity in the plagued housing market is starting to slow.
The latest data from the CoreLogic House Price Index reveals New Zealand's annual growth rate hit 18.4 percent - up from 16.1 percent in March.
But valuation did drop by 11 percent - suggesting the Government's housing announcement in March does appear to be having an impact on market activity.
"The flow of valuations in April provides some evidence that housing market activity has reduced," CoreLogic said in a statement.
"This could reflect the official reimplementation of the loan-to-value ratio (LVR) restrictions from March 1. It may also reflect the uncertainty caused by the interest deductibility changes, as property investors take the time to assess the broader market impact and their own financial situation."
Auckland saw average property values rise by another 2.4 percent in April - a yearly increase of 15.6 percent and an average value of nearly $1.25 million.
In Hamilton, the pace of monthly changes in average prices gained momentum with 4.1 percent growth.
"Mortgaged investors have certainly been very keen on Hamilton, with a 39 percent share of purchases so far this year - but the latest policy changes will start to impact this group, almost immediately," CoreLogic head of research Nick Goodall said.
Tauranga's average house price levels exceeded $900,000 for the first time in April - up to $922,000. That's 19 percent higher than a year ago.
Wellington's property values also spiked in April, seeing 3.8 percent monthly growth.
"As with many other parts of the country, however, there is now clearer evidence that these rampant gains are seeing more would-be first home buyers drop out of the market, either by choice or because prices have exceeded their borrowing capacity," Goodall said.
Christchurch's property values rose by 3.3 percent in April, pushing the annual growth rate up to 15.1 percent. Values in the city have now topped $590,000, up by almost $78,000 from a year ago.
In Dunedin, average property values spiked by 2.4 percent, bringing the rise over the past year to 15.1 percent - down slightly from last month.
Impact of Government's housing package
The Government in March announced a suite of new housing policies, aiming to cool off property investment and help first-home buyers.
Goodall said while it might be surprising to see more property growth acceleration in April, it may take another month for things to slow down.
"We expect a downside impact on housing market growth to become evident over the coming months.
"Anecdotes throughout April were abundant - telling of quieter open homes, a greater share of auctions 'passing in' and that fear of overpaying had replaced the previous over-riding emotion plaguing buyers which was a fear of missing out.
"Looking ahead, our expectation for future gains has been tempered, as the profitability of investment property has reduced due to the tax changes around interest deductibility."