Official figures from QV Valuations, the government valuation agency show residential property values have dropped almost all over the country, the first national drop since the price dip of 1997-2001.
While there was a 2.2% decline nationally in the three months ended in July with the same period a year ago. the Invercargill area was the exception with year-on-year growth of 5.4%. But this is compared with a high of 36.4% last October.
QV Valuations said at the current rate of decline Invercargill will join the rest of the main centres with falling property values within a month or two.
Blue Hancock of QV Valuations said many sellers had accepted the state of the market and had dropped their expectations accordingly and this has resulted in an increase in activity in the market. But sale levels are still well below last year's and long term averages.
'The question has now changed from when will prices stop rising, to when can we expect to see them stabilise?' he said.
Prices in Auckland, the nation's largest city, fell 3.6%, Wellington saw a 1.6% drop, Christchurch a 2.1% fall and Dunedin is 6.8% down.
Banks said they expect prices to continue falling. Reserve Bank of New Zealand Governor Alan Bollard has predicted house prices will fall 7.7% this year and won't start rising until 2011.
'We expect to see more weakness in house prices over the coming months. Housing turnover is in steady decline,' said Jane Turner, economist at ASB Bank Ltd.
The housing crash is plunging more homeowners into negative equity, with their mortgage debt exceeding the value of their property.
Falling values mean New Zealanders who bought property from mid-2006 to the end of last year will be in negative equity now if they put in a deposit of 15% or less according to Chris Eves, property professor at Lincoln University in Christchurch.
