That requires stricter scrutiny of borrowers' financial health and Baird said it "seems to have had an immediate effect. Feedback from several regions notes a falloff in buyer numbers, particularly first-time buyers as a result".
She expressed caution about this year too.
"Over 2022, the impact of these changes and anticipation of further interest rate increases are likely to play out in the market, leading to a gradual slowdown in the pace of price growth," she predicted.
Minister of Commerce and Consumer Affairs David Clark has called on a planned investigation into new home loan regulations to be brought forward amid concerns banks were adopting too hard a line with the guidelines.
The Government brought in a number of changes to the law late last year, with officials saying the move would mean Kiwis could expect better protection from high-cost loans and unaffordable debt.
REINZ said sales volumes were down too by a sizeable 21 per cent from November when 8585 homes were sold to the quieter December when just 6755 residential transactions took place.
Prices were down from November's national median $920,000 to $905,000.
The year-end was flatter than most months in 2021 when national median prices declined 1.6 per cent month-on-month.
Auckland median prices fell from November's $770,000 to $760,000 last month.
When comparing December 2020 to last month, the sales volume picture was worse: transaction numbers fell 29.4 per cent from 9573 to 6755.
For New Zealand excluding Auckland, the number of properties sold last month fell 26.6 per cent annually from 6048 to 4442.
In Auckland, the number of properties sold fell 34.4 per cent annually from 3525 in December 2020 to 2313 last month.
"We are noting signs of deceleration in annual price growth compared to previous months. While the market remains confident, the impact of rising interest rates, tighter lending criteria and changes to investor taxation restrictions are starting to shift dynamics," Baird said.
It took longer to sell places last month when the median number of days nationally was 29, up two days compared to December 2020.
For New Zealand excluding Auckland, the median number of days to sell also rose by two days from 26 a year ago to 28 last month.
Act Party leader David Seymour said this month it was "welcome news" that David Clark had asked the Council of Financial Regulators to speedily inquire into December's law change.
But he said what he wanted was an "inquiry" which "must be real".
"I continue to hear about people turned down or credit for bizarre reasons," Seymour said.
"Today I heard of someone who missed out on credit for spending too much on their cat, another because their kids shared a room. This madness must be taken seriously by the minister and not kissed off with a weak inquiry.
"David Clark needs to realise this issue is serious and will not go away. As the madness spreads, he needs to take responsibility. I will keep pushing for the Finance and Expenditure Committee to address this issue if the minister does not set out the details of a serious inquiry."
Today's REINZ data comes after CoreLogic said last night four areas of New Zealand had $550,000-plus increases in values.
Kelvin Davidson, CoreLogic NZ chief property economist, said that the biggest gains were in Herne Bay, Arrowtown, Jacks Point and Lake Hayes.
But he says the rises might not be repeated in 2022.
"New Zealand's housing market is due for a slowdown this year as affordability bites, mortgage rates rise, lending rules tighten and with more choice on the market for buyers, we would expect a dampening on price pressures."
Michael Gordon, Westpac acting chief economist, said today's REINZ data provided more convincing evidence that higher mortgage rates and tighter lending restrictions were having an impact on the market.
The house price index fell by 0.5 per cent in seasonally adjusted terms, the first monthly drop since the Covid lockdown last year. Sales continued to fall, and are now starting to drop below pre-Covid levels, Gordon said.
The softening was most apparent in Auckland. The price index fell by 1.7 per cent in December, though that followed some steep gains in the previous two months, possibly reflecting the region's move out of alert level 4.
"For the rest of the country, the story has been one of steady deceleration over recent months, with prices up just 0.1 per cent in December," he said.
"The screws have been tightening on the housing market in recent months. Most importantly in our view, fixed-term mortgage rates have risen sharply since September, in anticipation of the OCR hikes that the Reserve Bank will deliver over the next couple of years," Gordon said.
"We've been forecasting the housing market to turn to moderate price declines from the second half of this year. However, the timing of that turnaround has always been fluid and given the scale of the rise in mortgage rates in recent months, it may prove to be earlier than we estimated. That in turn could have implications for the strength of consumer demand this year, and the extent of OCR hikes that will be needed to keep inflation in check," Gordon said.