House values continued to fall last month but at a slower pace, with Wellington leading the decline.
CoreLogic's House Price Index (HPI) showed a 0.6 percent drop in November, which was less than half the 1.3 percent drop in October.
However, the drop in values was mixed in the major centres, with Christchurch still growing at an annual rate of 4.9 percent, while Wellington fell 15.9 percent, with more significant drops in Porirua, Lower Hutt and Upper Hutt.
"Wellington continues to be at the epicentre of the downturn," CoreLogic head of research Nick Goodall said, with affordability the main reason for the correction.
Dunedin also fared better than most of the pack with a minor 0.3 percent increase in value.
Auckland's value drops were also moderate, but Goodall said there was a need for caution as many of November's sales took place prior to the market being hit by the most recent round of pessimism and continuing interest rate hikes.
Housing affordability would continue to be a concern heading into 2023, he said.
"Falling house values are starting to improve many of the measures we track, but persistently increasing interest rates is impacting mortgage serviceability.
"The latest data reports an average 50 percent of income is required to service a mortgage with 80 percent loan-to-value ratio for the average dwelling value," he said, adding mortgage interest rates were likely to rise to 8 percent from next year.
The difference between the New Zealand's central bank tough stance and the Reserve Bank of Australia wait-and-see approach was intriguing, Goodall said.
"The RBNZ will be wary of this too but appear comfortable in the knowledge they can always reduce the OCR in the future to stimulate the economy and borrowing if required."
'Scary' for some
The number of houses being listed for sale has crashed by 26 percent compared with the same period last year as property prices fall.
While the drop in listings might be considered "scary" by some, it should be remembered listings had risen sharply as the Auckland lockdown came to an end last November, Vanessa Williams from realestate.co.nz said.
The national average asking price is now below $900,000, which is down nine percent since last January.
Williams told Morning Report nobody had predicted the "hot market" during the pandemic years 2020-2021 and the latest figures could be regarded as "a correction to the intense growth rate".
For two years regions had seen prices go 25 to 30 percent higher which was not sustainable.
The nine percent drop in prices since January was a cooling of the inflated Covid-19 times, Williams said.
Earlier this week ANZ predicted prices would fall by 22 percent with the market around halfway through the fall cycle.
"We just don't know what levers the government or the Reserve Bank are going to pull but should things stay as they are we will probably continue to see that cooling of prices," Williams said.