Figures released yesterday by the Real Estate Institute of New Zealand found house price growth in Otago had slowed to 13% in the 12 months to January, down from a peak of 21% recorded in July last year.
The number of houses sold last month also dropped.
Sales fell to 184, compared with 247 in January last year.
The region recorded a median house price of $735,000 last month, up from $721,000 in December.
Dunedin’s median price was $670,000 while Queenstown’s was $1,302,000.
There was a level of caution in the market due to Omicron and the Red setting of the Government’s traffic light system, REINZ Queenstown director Gail Hudson said.
Alongside the tighter lending restrictions, the median price continued to make it difficult for first-home buyers to enter the market, she said.
The slowdown was also being felt in Southland.
The region’s growth rate dropped to 9.7% in the 12 months to January, compared with 21% recorded in December last year.
Southland’s median house price also dropped to $430,000 last month, down from $455,000 in December.
Professionals Real Estate Invercargill director Tim Frampton said the new lending rules meant first-home buyers had "basically left the market".
Last month, which was traditionally a busy month, had been "very quiet".
The number of first-home buyers at open homes was less than half what had been seen late last year, he said.
At the top end of the market, it was the busiest he had ever seen it.
With the delays in getting materials caused by supply chain issues, people had given up on building new homes and were wanting to buy instead.
People from the North Island moving to Southland for a lifestyle change were also showing interest in houses priced between $800,000 and $1 million, Mr Frampton said.
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Don't forget the fact that developers are buying up all the housing to turn into cruddy 2 story flats to everyone's detriment..... Neighbours as well as first home buyers are getting the Royal screw job