Barfoot & Thompson's Housing Market Update for May highlights a slowing property market, with sales volumes down 14 per cent compared to May 2013.

Most striking is that whilst total sales are down 14 per cent compared to a year ago, sales of property below $400,000 are down 50 per cent.

This segment of the market has been the hardest hit by LVR restrictions which came into effect in October of last year.

In the eight months since October, sales of properties with values at less than $400,000 have totalled 1,541 compared to property sales a year earlier of 2,123. That's nearly 600 less purchases over that period, at a time when overall sales volumes barely changed.

LVR restrictions have certainly put a dampener on the entry level property market. The restrictions were introduced as a temporary economic measure to ease house price inflation but they are expected to remain in place at least until the remainder of the year according to bank. Beyond that, the current 10 per cent limit on bank lending to those with less than 20 per cent deposits are merely likely to be eased rather than scrapped.

Source: Interest.co.nz and NZ Herald