More people are discarding plans to buy houses and instead concentrating on reducing debt, state-owned housing valuer Quotable Value says.
QV figures show the number of house sales in recent months has dropped about one third from the same time last year.
Research director Jonno Ingerson says New Zealand is approaching similar levels of sales as during 2008, at the height of the recession.
National average values have dropped 0.8% since March, after rising 4.9% in the previous eight months, and are now 4.7% below the market peak of late 2007.
While values have declined, the average sales price increased slightly to $407,191, which QV says is simply due to relatively fewer lower value properties selling over recent months.
Regional values
Auckland area values are 6.9% above last year, down from the 7.9% reported last month.
Recent declines in the Wellington area mean values are now only 3.2% above last year, down from the 5.4% reported last month.
Values have been flat in recent months in Christchurch and are now 4.6% above last year.
Dunedin values are now 3.7% above last year, down from the 5.8% reported last month.
Tauranga and Hamilton values have remained relatively stable in the last year, and values in most provincial areas remain above what they were at the same time last year.
Property investor, Ollie Newland, says the property market is not as dire as many were forecasting.
Agents hope for better spring
Harcourts and First National Real Estate agree the housing market has slowed.
First National group manager John Stewart says there is not only a lack of confidence among buyers, but, unless people are under pressure to sell, most are holding on and waiting to see what happens.
Mr Stewart anticipates a 10-15% percent rise in the market in spring, though the lift might not be of the size the industry usually sees at that time of year.
ASB survey
Separately, ASB Bank's quarterly housing confidence survey found fewer respondents are picking house prices to rise, weighed down by expected interest rate hikes.
For the three months to July, the survey shows a net 29% believed it's a good time to buy a house, the same as the previous quarter.
However, only a net 19% think house prices will increase in the next year, compared with 35% three months ago, while more also expect interest rates to rise.
ASB is forecasting house prices to decline by about 4% into early next year, because of higher mortgage rates and slowing net migration.
