House prices have moderated, but the Reserve Bank is not claiming victory just yet.
Lending limits and higher fixed mortgage rates have helped cool prices.
The governor of the Reserve Bank, Graeme Wheeler, said nationally, price growth eased to about 0.5 percent in the five months to December, compared with 10 percent in the previous period.
In Auckland, prices slowed to 1.5 percent.
However, Mr Wheeler said high levels of immigration and still-low interest rates could re-ignite the property market.
"It is possible that house price inflation could pick up again. A lot will depend on the supply side and how successful New Zealand is as a whole, if I could put it that way, in terms of getting more houses completed," he said.
The number of building consents for new homes tailed off at the end of last year, driven down by a fall in apartment consents.
Mortgage rates likely to rise
The Reserve Bank also warned households that mortgage rates are likely to keep rising, despite signalling the cash rate is on hold for some time.
Mr Wheeler left the benchmark rate on hold at 1.75 percent yesterday, where it was forecast to stay until well into 2019.
The cash rate normally influences the level of floating home loan rates.
But fixed rates tend to be set by overseas funding costs, which have risen on the expectation that the United States will embark on a programme of tax cuts and debt-funded infrastructure spending.
Mr Wheeler said those rates could rise much further.
He said people should take care they don't take on too much debt when buying a house.