Despite a slowing of activity and demand in the Tauranga market over the past month, home values in Tauranga City are still showing strong value increases over the past year, up 28.1 per cent since September 2015.

The average value in the city is now $644,297, increasing by 7.4 per cent over the past three months.

House prices are still climbing in Tauranga. File Photo.

QV homevalue Tauranga Registered Valuer David Hume says new LVR restrictions have impacted on rising house prices.

'Investor activity in the Tauranga housing market has slowed somewhat, following the introduction of new LVR restrictions requiring investors to have a 40 per cent deposit, up from 20 per cent previously,” says David.

'Investors are still adapting to the new rules and the strong demand from buyers has stopped as suddenly as a ‘tap being turned off' according to some industry professionals. It remains to be seen how these new rules will affect the market in the long term.”

Agents report buyer inquiries are down by 30% and listings are up by around 20 per cent due to the arrival of spring, which is leading to a reduction in competition in the market.

Surrounding regional centres such as Te Puke, Rotorua, Kawerau and Matamata are still seeing strong buyer demand.

'This may be due to the lower entry point meaning the new deposit does not impact investors as much in the more affordable regional towns, as it's easier to find 40 per cent of $200,000 in a market like Rotorua than 40 per cent of $400,000 which is entry level in Tauranga.”