Photo: RNZ
Further cuts to the Reserve Bank's official cash rate are not expected be enough to drive housing market prices up in the short-term.
QV's September data indicates average national values had a month-on-month drop of 0.4 percent in September, and were down 1.6 percent in the September quarter compared with a 2 percent quarterly decline in QV's August index.
The national average value rose just 0.3 percent to $901,920 on the same time last year.
The rate of decline was seen in most of the major centres, with an average three-month rolling rate of reduction in Auckland (-1.7 percent), Christchurch (-0.8 percent), Hamilton (-1.2 percent), Dunedin (-0.8 percent), with a notable exception in Wellington, where home values dropped at twice the national average rate.
The Wellington region's average home value fell an average of 3.2 percent in the September quarter, which was slightly more than the 3 percent drop in the August quarter.
QV operations manager James Wilson said there were some positive signs with an expectation of further drops in interest rates, as the Reserve Bank updates its decision on the official cash rate on Wednesday.
A super-sized interest rate cut by the Reserve Bank looked increasingly certain with economists and financial markets pushing for a quicker reduction in borrowing costs.
"There seems to be a spreading expectation that interest rates can only go one way, and so we're seeing more people at open homes, in auction rooms, and browsing for property online," Wilson said.
"And so it certainly seems like a general uplift in property values is now on the horizon, but despite growing confidence and optimism that we're through the worst of it, the conditions aren't yet conducive to growth.
"The cost of borrowing still remains relatively high, the cost of living is restrictive, and there are significant worries about job security - especially in Wellington."
Wilson said a high level of stock for sale was also putting pressure on prices with more than enough houses for sale to meet the current level of demand.
There are some positive signs in the housing market, with an expectation of further drops in interest rates. File photo. Photo: RNZ
"Generally speaking, those who are in a position to purchase still have a raft of different options to choose from right now, especially within the main centres," he said.
However, he expected the market to shift as interest rates continued to fall.
"A larger cut, like what we saw recently in the US, will only reinforce it even more."
While current market conditions were positive for first-time buyers, he said falling interest rates would likely increase competition with more investors expected to return to the market.
"This will ramp up the level of competition in the housing market and help to absorb some of that excess stock," Wilson said.
"Values will inevitably tighten again when prospective buyers aren't so spoilt for choice."
