Last month REINZ said December data pointed to price falls beginning to stabilise as sales remained subdued.

However, QV says last month’s 1.1% decline nationally suggested a steeper decline and put the annual drop in prices at 12.1%.

QV chief operating officer David Nagel says is looks as though the bottom of the market has not been hit yet.

“As a result, it seems many prospective buyers are being cautious right now, waiting to see exactly how far prices will fall.

“Others are finding it too difficult to obtain finance or are unwilling to make such a commitment given the high level of economic uncertainty.”

He says no one is arguing whether price falls are happening, just the magnitude of those falls.

Palmerston North and Hastings had the biggest falls of 3.3% and 3% respectively for the three months to the end of January.

The Wellington region was also hard hit with an average house price fall of 2.8% over the three months and a decline of 20.4% annually.

In the Auckland region house prices were on average 14.3% lower than at the same time last year.

Price falls also hit Christchurch and were down 1.3% to an average price of $849,097 for the three months to the end of January.

Queenstown had it first quarterly house price drop, with values falling on average 0.7%.

Falls to keep coming

Most economists expect property prices to keep falling and reach a trough of 20% plus if the Reserve Bank hikes the OCR again this month.

The Reserve Bank has also admitted it will try to engineer a recession this year. This could lead to the unemployment rate lifting and mortgagee sales if homeowners cannot meet their mortgage payments.

However, investors, who usually take a quarter or more of the buying market share are sitting on the sidelines waiting for October’s general election and whether the government will change. National has promised to reinstate mortgage interest payments as tax deductions and roll back the Brightline test.

Weather doesn’t help

Nagel says the recent flooding and Cyclone Gabrielle have done less than nothing to halt price drops.

He says house values in flood-stricken areas of Northland, Auckland and Bay of Plenty were likely to recover fairly quickly, as was seen in Nelson following another extreme weather event last year.

“But the record amount of rainfall has been yet another obstacle for potential buyers and sellers to deal with at a time when house sales are already at an historic low.

“It’s little wonder it’s been a slow start to the year for the residential property market as people also grapple with an increasing cost of living, rising interest rates and inflation.”