The residential property market showed "considerable improvement" in May as values stabilised, latest figures from QV Valuations show.
The QV national residential property indices for May, released today, recorded an 8.1 percent decline in property values over the past year.
That was a considerable improvement on the 9.2 percent decline reported for the year to April, and was the second month in a row where the year-on-year change had improved, QV said.
"This improvement is due to continued stabilisation of property values in recent months, and contrasts significantly to a market that was declining sharply 12 months ago."
The QV figures support recent upbeat reports from the real estate industry, but some economists have warned the pick-up in the market is unlikely to last in light of sharp rises in longer term mortgage rates.
QV spokeswoman Glenda Whitehead said established investors were now back in the market, along with first home buyers and those looking to upgrade.
But it was difficult to predict where property prices would go from here, she said.
Longer term mortgage rates were likely to stay higher, unemployment was forecast to rise during the next two years, and dairy payouts were set to decline.
All those factors would normally put further downward pressure on the market, Ms Whitehead said.
But many of the traditional factors were not reflecting directly in the current property market in the same way they had in the past.
"Forecast net migration is more positive, but the coming winter months are traditionally a slow period for the property market and will provide a true test for whether the recent property market revival will continue."
The national average sale price slipped to $371,555 in May from $372,981 in April and was 4.1 percent lower than the same time a year ago.
But during much of the last year a lack of activity at the lower end of the market artificially held average prices higher. The lower end had become more active in recent months, QV said.
Property values in all main centres increased slightly in recent months. As a result the annual change in property values across the Auckland area improved to a decline of 7.6 percent in May from a 9 percent decline in April.
Wellington had a decline of 7.4 percent in the May year, improving from an 8.5 percent decline a month earlier.
In Hamilton, the latest annual decline was 7.5 percent from an 8.8 percent decline, while in Tauranga the annual price fall eased to 9.4 percent from 9.9 percent.
Christchurch recorded a decline of 8.1 percent, from a 9.6 percent annual fall in April, while in Dunedin the latest annual decline was 5.4 percent compared to an 8 percent fall in April.
NZPA