Properties under $650,000 are still being snapped up by first-home buyers but it seems some may now be holding off in the hope of getting a KiwiBuild house.

Quotable Value's July House Price Index found stagnant prices and a drop in investor activity had left New Zealand's housing market open to first-home buyers and led "affordable" homes to become the fastest sellers.

The report found national house prices fell 0.7 per cent in the last three months to an average of $673,797, although this was still 5.1 per cent up on a year earlier.

Auckland home prices, meanwhile, dropped 0.1 per cent in the quarter to an average of $1,050,778, but were up 0.6 per cent compared to a year earlier.

A willingness by sellers to adjust their expectations down and negotiate with buyers helped hold the city's prices stable, QV's analysts said.

Another trend expected in the coming months was Government programme, KiwiBuild's, impact on first-home buyers, QV general manager David Nagel said.

"First-home buyer activity remains relatively strong across most of New Zealand, although we're observing a drop in activity in some areas over the past few months," he said.

"This could possibly be due to the fact that some buyers are holding off purchasing, hoping they'll attain a KiwiBuild property in the ballot."

The price cap for a three bedroom KiwiBuild home is $650,000 in Auckland and Queenstown and $500,000 outside those areas.

Overall, the latest index indicated Auckland's stagnant market may now be starting to spread to other parts of the country.

House values remained relatively flat in Tauranga with a 0.2 per cent drop in average house prices over the last quarter, Christchurch (with a 0.5 per cent gain), Hamilton (0.8 per cent gain) and Invercargill (0.9 per cent gain).

The Queenstown Lakes District, meanwhile, was the country's best performer with average prices up 3.4 per cent over the last quarter to $1,168,728.

Prices were also up 1.8 per cent in Dunedin to $411,669, 2.9 per cent in Palmerston North to $394,966, and 1.5 per cent in Wellington to $651,725.

"Dunedin continues to buck the trend," Nagel said.

"With an average value of $411,669, investors are attracted by a relatively low values and strong yields."

Investor activity, however, continued to drop in most other major cities, due in part to tighter lending restrictions and "a period of consolidation after recent growth", Nagel said.

Along with declining investor interest, buying and selling activity also fell in Auckland, QV senior consultant James Steele said.

"[However] entry-level properties, especially those which are well presented and under $650,000, continue to transact," he said.

"This is understandable given the current affordability challenges and built-up demand from first home buyers."

Loan Market Auckland's Bruce Patten said business from first-home buyers was also up among his network of 1100 mortgage advisers.

"Our figures are up almost 150 per cent on the same time last year in terms of volumes," he said.

"That is partly due to people going and seeking advice because they've had problems as the banks have started tightening up lending."

"But it is also partly reflective of how first-home buyers and millennials do tend to go to a third party for advice as opposed to direct to the bank."

However, he said it was too early to judge whether first-home buyers were holding off buying now in the hope of later securing a KiwiBuild home.

With demand for KiwiBuild homes far outstripping the number being built in the short term, Patten said the odds of being drawn in the ballot were small.

"There will be a lot of disappointed people if they do decide to hold off," he said.

On the other hand, he said there was no urgency to jump into the housing market as compared to two years ago where a decision to wait three months may have led to house prices jumping $50,000 or more."That is possibly a reason why some might say: 'I'll see if I get in the KiwiBuild ballot and keep saving, and if I don't [suceed in the ballot] then I'll have a bigger deposit anyway because I will have saved more'," he said.

Property website realestate.co.nz's July report also found strong buyer interest across the country.

Spokeswoman Vanessa Taylor said as many people searched the site last month as in its typically busier summer months.

"They may not necessarily be looking to buy or sell their homes right now but are checking out the possible opportunities," Taylor said.

Yet, despite this lively interest, the total number of homes for sale in July at 21,288 was down 3.8 per cent compared to the same month in 2017.

Meanwhile, realestate.co.nz's national asking prices increased by a marginal 0.9 per cent compared to a month earlier.

This included Auckland's average asking price increasing for the first time in four months to $959,067.

Wellington's average asking price jumped 1.5 per cent compared to a month earlier to hit $628,899.