New Zealand property values rose at the slowest annual pace in 13 months in July as rising interest rates, restrictions on low-equity home loans and the onset of winter took the heat out of the housing market.

Property values nationwide rose 7.6 per cent in July from a year earlier, slowing from an eight per cent annual pace in June, according to state-owned valuer Quotable Value.

That was the slowest annual increase since June last year.

Sales volumes were between 15 per cent and 25 per cent lower than the same periods in 2012 and 2013, QV said.

Reserve Bank governor Graeme Wheeler started hiking interest rates this year, and in July said house price inflation had moderated since the June monetary policy statement.

“This slowdown is most likely due to the LVR (loan-to-value) speed limits and interest rate rises as well as the annual winter seasonal downturn,” spokeswoman Andrea Rush said in a statement.

“However, the Reserve Bank has now said it will take a break in rate rises for the moment and banks are advertising that they will negotiate on lending to those with deposits of less than 20 per cent.”

While Thursday’s figures show a slowdown in the annual rate of increase, property values rose 2.3 per cent in the three months ended July 31, accelerating from the 2.1 per cent pace in the June quarter, and a 0.7 per cent three-monthly pace in May.

Low equity home loans dried up after the Reserve Bank imposed the restrictions, accounting for as little as 3.6 per cent of new lending in March, but have since crept back up to 6.7 per cent in June, according to central bank data.

QV said Auckland property values rose 2.1 per cent in the three months ended July, slowing from a 2.7 per cent three-monthly pace in June, and were up 11.7 per cent annually.

Values in Wellington fell 0.9 per cent in the three month period, and were up 1.2 per cent annually, while Christchurch city values increased 2.1 per cent in the rolling three-month period, and were up 6.5 per cent from a year earlier.

By Paul McBeth