New Zealand's median house price rose an annual 6.7 per cent in May, with four regions recording new records, although activity slowed, according to the Real Estate Institute.

The national median house price increased to $540,000 in May from $506,100 in May last year, the institute said. It was unchanged from April.

Sales volumes fell 18 per cent compared with a year ago, and the median number of days it took to sell a home increased to 37 days from 32 days.

Record migration and low interest rates have bolstered the country’s housing market, prompting the central bank to tighten up lending rules to reduce the risk to the nation’s financial stability. In Auckland, the country’s largest city where rising prices have made housing unaffordable for many, the median price rose an annual 5 per cent to $865,000, compared with an annual pace of 8.4 per cent a year ago, while sales volumes dropped 28 per cent.

‘We are seeing a continuing trend of strong median house price growth in many of the regions year-on-year, however a lack of inventory continues,” said institute chief executive Bindi Norwell.

“Given the considerable mismatch between population growth, increasing immigration figures, low interest rates, high housing demand and low building consents and housing supply, it’s clear why prices are still rising – although at single rather than double-digit growth levels.”

Regions which hit a new record median price in the month include Northland ($450,000), Manawatu/Wanganui ($269,000), Nelson/Marlborough ($483,250), and Southland ($238,000).

The number of properties sold by auction, which is often an indicator of a heated market, declined 52 per cent to 956 across the country.

Ms Norwell said buyers were more cautious heading into winter which typically sees a slowdown in activity.

Other factors impacting the market included the election year, political uncertainty in some traditional trading markets and that first-time buyers are finding access to capital more difficult.

By Tina Morrison