In the latest figures provided by Quotable Value, the Dunedin market showed a decline in annual growth of 0.1% in the three months to the end of April.
The average price of a property in Dunedin was $272,361, down 0.1% compared with the corresponding period last year.
Opotiki and Whakatane, in the Bay of Plenty, were the only other two areas which returned negative growth figures.
QV Dunedin spokesman David Paterson said this was the first time the index had gone into the negatives since it started in May 2004.
He said there was no evidence to show the trend would change in the short term as the market moved into the traditional slower winter period.
Sales had been on the downward slide since last July and the statistics were starting to reflect that, he said.
In the three months of the end of March, negative growth had been recorded in the southern part of Dunedin, and this trend continued with last month's index showing minus 3.5%.
"This area is popular with investors and first home buyers and it is perhaps an indication that they are holding off making purchasing decisions until the market settles," he said.
Agents were reporting little interest in open homes, but properties realistically priced were still selling, with most activity in the $250,000 to $300,000 range.
Mr Paterson said this price range accounted for 50% of sales.
Growth in other parts of Otago was steady.
In the Waitaki district, growth was 11%, down from 12.9% in March, while the average sale price was $214,772.
Central Otago had growth of 5.6% compared to 8.8% in March, with an average sale price of $327,593.
In Queenstown Lakes, growth was 7.4%, up from 6.2%, with an average sale price of $560,067.
Growth in the Clutha district was 10.3%, down from 12.1%, with an average sale price of $171,032.
Nationally, the market rose by 4.9% in the year to April, down on the 6.5% recorded in March.
QV national spokesman Blue Hancock said most of the growth occurred in autumn last year and negative figures were expected to be seen in many areas in the coming months.
The average national sale price was $388,465.
A correction was inevitable, Mr Hancock said, and how long buyers stayed away would determine the size of the price correction.
