The latest figures from real estate valuer OneRoof showed that over the past three months, the average property value in South Dunedin had dropped 2.6% to $419,000.
The average for the city was a 0.3% decrease to an average value of $678,000.
The drop in South Dunedin comes as the area grapples with the after-effects of the floods, which were among the worst in the area in a century.
Property Brokers Dunedin manager Dan Ferguson said there was no cause for alarm.
"Property values are something that come and go. I wouldn't read too much into it just yet.
"There hasn't been a whole lot of property in South Dunedin come on to the market recently, so it’s really hard to say whether the flooding has been a factor."
Mr Ferguson said the council’s improved response to the October floods, compared with the 2015 floods in the same area, was worth mentioning.
"In general, the council did a good job of the cleanup this time. Maybe houses were not as affected as they were in 2015."
Nidd Realty owner-principal Joe Nidd said he was cautious not to read too much into short-term suburb trends due to the very small sample set.
"Given there have only been 21 sales over that period, it is more likely to be a statistical artefact than a firm indicator of a trend.
"We don't see this as a reason for concern."
Mr Nidd said his firm had noticed an increased level of caution from buyers in South Dunedin, similar to periods after other flood events, but this tended to drop off over time after those events.
"South Dunedin still holds appeal for buyers, particularly in terms of affordability.
"The increasing attention towards future resilience for the suburb is being welcomed by residents and potential buyers with the recent events adding further motivation for all parties to work towards long-term solutions in a timely manner."
Climate Sigma managing director Belinda Storey — who researches climate change risk in the property industry — said the 2.6% drop still did not properly reflect the risks of buying a property in South Dunedin.
"There's a mis-pricing in the market, and that mis-pricing will only stick around for a certain period of time."
"So the sooner that homeowners and potential property buyers start to acknowledge that these properties are overpriced, the smoother the decline in the property price will be.
"If you cross your fingers and hope that no-one notices that this risk is getting worse and worse, then you're much more likely to have a sharp drop in property prices sometime in the future."
It was a mixed result for other parts of Dunedin.
St Kilda recorded the highest increase for the city over the past three months, rising by 2.6% to $525,000, followed by Corstorphine, which rose by 1.2% to $611,000.
Meanwhile, Maori Hill, where properties were valued the highest at an average of $1.054million, had the second-biggest price dip, dropping 2.4%.
