Despite forecasts of slower growth this year, national property values rose 2.1 percent in January, according to latest figures.
It follows a 1.9 percent rise in December, taking growth in national property values over the last 12 months to 27.5 percent.
Released on Wednesday, the CoreLogic House Price Index (HPI) shows the average New Zealand property is now valued at $1.028 million.
In Auckland, property values grew 26.6 percent over the year to January, the average property now valued at $1.47 million.
Recent gains in Christchurch appear to have levelled off, the annual growth rate dropping from 38 percent at the end of December to 35 percent at the end of January. In Hamilton, the average property value is $908,475, representing a 30.9 percent annual rise.
Referring to the 2.1 percent rise in national property values as a "surprise to the upside", CoreLogic said it appears there's some steam left in the property market.
A range of factors, such as tougher lending rules following Credit Contracts and Consumer Finance Act (CCCFA) changes, rising mortgage interest rates and the Omicron outbreak could be skewing the results.
There is still "mounting evidence" that residential property values could slow in coming months, some areas more exposed than others.
"Certainly, property market activity levels seem to have passed their peak, and typically that will lead to a clearer slowdown in values after a lag of a few months," Corelogic said in Wednesday's release.
CoreLogic head of research Nick Goodall said the shift to the red traffic light setting on January 23 brings another layer of uncertainty to the market.
Changes to CCCFA rules, officially introduced from December, made it tougher for borrowers to get lending approved. Tighter loan-to-value ratio restrictions and rising interest rates also affected borrowers around the same time.
Minister of Commerce and Consumer Affairs David Clark has asked the Council of Financial Regulators to bring their investigation forward on whether the CCCFA is being implemented as intended.
"The difficulty for the regulators will be to disentangle the impact of the CCCFA changes, alongside tighter loan-to-value ratio (LVR) restrictions, which have further limited the volume of high-LVR loans, and increasing interest rates, which have impacted borrower affordability," Goodall said.
Further interest rate rises are likely, strengthened by a 5.9 percent annual rise in household living costs in the December 2021 quarter. Low unemployment, currently 3.4 percent (December figures are due out on Wednesday), makes a significant downturn in property prices unlikely.
Existing homeowners have been tested on their ability to service mortgages at high interest rates, making it less likely they would miss mortgage payments.
"Unless they lose their job or a significant proportion of their income they are unlikely to want to sell their property," Goodall said.
Government tax changes affecting investors, including removal of the ability to offset interest expenses against income for tax purposes may mean investors have more costs to consider.
But doubling of bright-line rules from five to ten years may provide a greater deterrent to selling.
Looking ahead, tighter tax rules, reduced access to credit, lower returns and low gross yields could have a noticeable effect on investor demand, particularly in certain regions.
"Available listings will play a key part in this, with some cities having more than double the amount of properties listed for sale now than the prior year (Lower Hutt, Palmerston North), while others continue to have fewer (Whangārei, Queenstown)," Goodall added.
In January, CoreLogic chief property economist Kelvin Davidson told Newshub he expects property values nationally to grow up to 5 percent this year, anticipating a "slowing national average". Individual regions could see "some rises" and "some falls within other places", Davidson said.
