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Property prices in Christchurch have risen significantly compared to pre-Covid levels with the median now sitting at $686,806.
However, Corelogic data shows New Zealand's property market has been going through a second downturn with the national median property value dropping by $30,000 since the most recent price peak.
The property research firm has released its August update, which shows values slipped nationally by 0.5 percent in the month. That is the sixth monthly fall in prices in a row.
Prices are now down 3.7 percent from their most recent peak in February this year and 16.8 percent from the peak recorded after the pandemic in January 2022.
Christchurch had the largest increase in prices compared to pre-Covid levels, up 40.7 percent to a median $686,806. The next largest increase was in Tauranga, which was up 20.9 percent.
Corelogic chief economist Kelvin Davidson said there was some catch-up happening in Christchurch as it had not experienced strong price growth before the pandemic.
But he said, compared to local incomes, the city's prices are now less affordable than Wellington's.
Davidson said buyers are in a good position.
"It's clear that the bargaining power lies with buyers in a market where the stock of available listings is sitting at multi-year highs.
"But that's still only for the more limited pool of buyers who can actually secure the finance."
Auckland prices are down 6 percent from the most recent peak alone.
"It's a bit wrong to label this some kind of soft patch now," Davidson said.
"We're into a second downturn really. In dollar terms the median value is down about $30,000 from the [most recent] peak."
The drop was driven by still-high mortgage rates, pressure on the labour market, and the large number of listings available for buyers to choose from, he said.
Davidson said prices were still slightly above their lowest post-Covid boom point but the growth of 5 percent or 6 percent recorded in prices over the last few months of last year and the beginning of this year had "basically fully reversed".
He said the drivers of the market are likely to be balanced from here.
Mortgage rates are coming down, which had a powerful impact on both people's finances and how they were feeling.
But unemployment is also increasing and job insecurity is likely to limit activity, he said.
"Affordability hasn't really improved.
"House prices have come down but mortgage payments as a share of income are still high."
Davidson said there are also indications that when mortgage rates dropped to 5.5 percent, and the serviceability rate that banks use to test whether buyers can afford mortgages was around 7.5 percent, debt-to-income ratios could become more of a restraint on the market.
These limit how much people can borrow compared to their incomes.
He said there could be periods where activity picked up and then died away again.
"The central scenario has to be over 12 or 18 months that you're looking at a fairly flat market.
"There could be a short-term boost that peters out like we saw at the end of last year.
"That seemed to be sentiment-driven then reality kicked in again."
Prices had taken five years to regain their previous peak after the global financial crisis, he said.
