Prices were down 1% and it is the fifth quarter in a row that prices have fallen taking them to their lowest in more than two years in the first quarter, according to the data from Quotable Value New Zealand, the government valuation agency.
Prices in main urban areas fell 0.3% and in Auckland, the most populous city, they were down 0.2%, the index shows.
But it is hoped that the increased lending limits on a loan scheme for first time buyers in New Zealand will help boost the country's property market.
Like many established property markets, first time buyers are regarded as the key to improving sales and bringing the sector out of the doldrums.
Officials are poised to announce that lending limits for 'Welcome Home' loans are to increase next month. The current loan limit of £280,000 is expected to be increased to between $320,000 and $350,000.
Real Estate Institute president Mike Elford said the new limits would be welcomed.
'If you couple that increase with the effect of lower interest rates, it's a huge step up for people,' he said.
The loans, available through Kiwibank and six smaller lenders with a Housing NZ guarantee, have provided $719 million to 4482 low income first home buyers since they were launched in 2003.
The increase is overdue, according to housing minister Phil Heatley. He confirmed that the loan limit has never been increased since it was introduced despite the fact that it had fallen behind property values.
The income limit to qualify for the loan will not be increased and will remain at $85,000 for one or two borrowers.
The scheme has been regarded as a huge success. So far only 18 loans have fallen over, almost all due to marriage breakups.
