A survey of real estate agents suggests the Reserve Bank's restrictions on bank lending to people with small deposits is deterring first home buyers.
Bank of New Zealand's (BNZ) latest survey has found a net 44 percent of agents report they are seeing fewer first home buyers.
BNZ chief economist Tony Alexander said first home buyers had been scared away or shut out of the home ownership market by the new credit controls, which he attributed to restrictions on loan-to-value ratios imposed by the Reserve Bank.
From last October, each bank's mortgage lending to people with deposits smaller than 20 percent has been restricted to no more than 10 percent of their net new lending.
"Certainly, if we're looking at the role of first-home buyers in the market, we've got a net 40 percent or so of the 373 agents responding in the survey saying that they are still seeing fewer first-home buyers out there.
"So I guess that's the galling thing about this control put in place by the Reserve Bank to improve the quality of bank balance sheets: it's hitting on this one particular group out there."
The Auckland and Christchurch markets remained sellers' markets but outside of those areas, it was subdued.
The Reserve Bank last week raised the Official Cash Rate by 25 basis points to 2.75 points but Mr Alexander said the impact of that would not be known for a few months.
Of the agents surveyed, 31 percent believed house prices would continue rising - down from 51 percent last September.
"One of the phenomenons out there is that in many markets, there's still a shortage of listings, so the prices are not necessarily under this downward pressure because of first-home buyers pulling out of the market," Mr Alexander said.
"Investors are still very active in the market, for instance, possibly because they see these young people are simply going to have to rent for a longer period of time."
As well, there was a migration boom under way which meant more pressure on housing nationwide but particularly in Auckland.
Meanwhile, the number of New Zealanders owning their own homes has fallen by more than 12 percent in the last two decades.
Official figures from last year's census show that 64.8 percent of households owned their own home or held it in a family trust.
That figure is down from 66.9 percent in 2006, and from 73.8 percent in 1991.
The figures include households which made mortgage payments as well as those that didn't.