House price inflation has vanished in Auckland and is slowing in other main centres as loan-to-value restrictions, tighter bank lending criteria and a pre-election slowdown deter buyers.

In its latest Economic Overview report, Westpac economists said prices had fallen 4 per cent since January in Auckland and more weakness was likely to come.

“Combined with last year’s tightening in lending restrictions and uncertainty ahead of September’s election, rising borrowing rates have seen annual house price inflation slow to just 1 per cent,” they said.

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Investors might see less opportunity for capital gains over the next few years, Westpac economists said.