Wellington's housing bubble has deflated as lending restrictions and election jitters combine with the traditional winter sales slump to trigger a drop in buyer demand.
The figures come a week after investment bank Goldman Sachs said in a report there was a 40 per cent chance New Zealand would suffer a housing market "bust" in the next two years.
It found the country was the most over-valued and at risk of correction but to qualify as a "bust", prices would only have to fall 5 per cent or more, after inflation.
Nick Goodall, analyst with property research firm CoreLogic, said buyer demand in the Wellington area had climbed strongly throughout 2016 until March this year.
But in the weeks before the Easter and Anzac Day weekends buyer demand sagged and had not bounced back – it was now at the same level as this time last year and was "noticeably less than much of the past 12 months."
Comparing the past three weeks to the same period a year ago Porirua suffered the biggest drop, falling 17 per cent, while Upper Hutt was still relatively strong going up 15 per cent.
Wellington city dropped 1 per cent, while Lower Hutt went up 4 per cent.
The crucial difference between Upper Hutt and Porirua had been in sales volumes since about March.
Demand remained relatively strong in Upper Hutt over the past six weeks, while Porirua saw a significant decrease and had not rebounded at all.
This could reflect the higher average value of Porirua ($511,000) compared to Upper Hutt ($446,000), Goodall said.
Wellington city's average value was $724,000 while Lower Hutt's was $503,000.
The market cooling was not unexpected as winter bedded in and the number of properties for sale dropped by 58 per cent compared to two years ago across the Wellington region.
"There's not much choice for buyers and demand is dropping away," Goodall said.
The market was being further constrained by the latest round of Reserve Bank LVR (loan-to-value ratio) restrictions and banks self-tightening on the restrictions.
Loan restrictions were affecting all buyer types while September's looming general election was causing uncertainty especially with announcements of party policies ramping up.
"No doubt home ownership and affordability will be one of, if not the most important topic for the election," Goodall said.