The housing market softened in the middle of the year, with investor activity particularly subdued, according to ANZ New Zealand's latest Property Focus report.
The report notes sales volumes declined and prices edged lower through the middle of the year.
"Investors in particular appeared to have pulled back this year," the report said.
"For investors, the upcoming election will be front of mind, given the Labour Party has committed to introduce a Capital Gains Tax on residential property other than the family home if elected," ANZ's economists said.
"The Labour Party is also yet to confirm its position on reintroducing limitations on investors including interest expenses when calculating their tax obligations, which is an important concern for mortgaged investors," they said.
The report also noted that the potential of a party favouring a land tax, the Opportunity Party, entering parliament "may also be exercising investors' imaginations."
ANZ NZ is the country's biggest home lender, with exposure of almost $119 billion as of March 31.
ANZ's economists also noted some sellers have "hit the pause button," reducing the number of listings on the market.
"However, new listings haven't eased back as much as sales volumes, giving buyers more choice and tilting the market marginally further in favour of buyers, making slight declines in house prices more likely," they said.
ANZ's economists are sticking with their previous forecast of an overall 2% decline in house prices this year, followed by a small rise next year.
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