Growth in house prices continues to slow, with the regions outperforming the main centres, where prices have gone back in some places.

Photo: AFP

Quotable Value's house price index rose 5.1 percent in the year to July, which compares with a 5.7 percent annual growth rate the month before.

For the quarter property values in Auckland, Tauranga and Nelson dropped slightly, which pushed the index to fall 0.7 percent nationally.

"We're seeing a shift in the market across many regions, with most of the market activity and value growth taking place at the 'lower-end' of the market where values are more affordable," QV general manager David Nagel said.

The national average house price was now $673,797.

Strongest price growth was reported in Queenstown, Whangarei, Palmerston North and Napier.

All other regions increased marginally.

Mr Nagel said the price drop in Auckland was because investors shying away from the market as policy restrictions loomed.

He said the national house price average remained high as first home buyers looked at the regions.

"[First home buyers] really have taken over investors as the key market players at the moment," Mr Nagel said.

He said house prices were not likely to ease much over the next year. However, there were some signs that would-be buyers might be holding back to see if they might get a KiwiBuild house in a ballot

Mr Nagel said low interest rates and solid local economic conditions suggested a stable market through the rest of winter.