The decline in Dunedin residential property prices is likely to hit double digits in the coming months, with other properties in Otago-Southland likely to follow the downward trend, a property valuer says.
Property prices in Dunedin fell 7.8%, compared to the national average decline of 4.5% and prices would get worse before they got better, QV Otago Southland area manager David Paterson said.
"All prices are trending the same, but Dunedin is ahead of the pack," he said.
The drop in Dunedin house prices appears to be easing, but it was likely city prices would hit double digits in the coming year before levelling off.
"We are likely to see values continuing to decline, albeit at a slower rate in the short term, followed by a sustained period of little or no growth as the market catches up."
The flip-side of the latest declines was that it was easier for some to get into the housing market.
People should not be scared of entering the property market, Mr Paterson said.
However vendors would need to be realistic.
"It is definitely a buyers' market. There are some good buys out there."
The QV statistics were calculated over the three months ending August 2008, compared to the same period last year, and show Queenstown-Lakes residential properties decreasing 3.4%, Clutha 4.2%, and Waitaki 0.1%.
Central Otago residential property prices increased 1.4%, Gore 2.9%, Southland 11% and Waimate 3.5%.
It would not be "unreasonable" for all regions to record falls of more than 10% in the coming year, Mr Paterson said.
Invercargill became the last of the country's provincial centres to record a drop in property growth, at 0.1%. Last September, the city had recorded a growth of 35%. "That is a telling drop," he said.
Rising living costs meant people were struggling to meet mortgage rate repayments, and there was anecdotal evidence people were selling their homes, preferring to rent, he said.
Property values continue to fall across the country, with all main centres and provincial centres showing lower values than 12 months ago, QV spokesman Blue Hancock said.
"There are definitely more properties selling at reduced prices as vendors adjust their expectations. Areas on the fringes of main centres, and holiday homes, are particularly affected, as increasing commuting costs and discretionary spend become key considerations."
The average New Zealand property sale price reduced to $391,487, with values in Hamilton declining 8.5%, Auckland 5.8%, Wellington 2.9%, and Christchurch 5.8%.
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