The subdued housing market has experienced its largest monthly drop in values in a year.
CoreLogic's House Price Index fell 0.5 percent in June - the largest month-on-month decline since June 2023.
Property prices are down in most parts of the country with a quarterly drop of 0.8 percent continuing a trend of minor falls seen in recent months.
Over the past 12 months to June, New Zealand house prices are up 1.8 percent.
The annual rise reflects the earlier but temporary 3.2 percent rise in prices between September 2023 and March 2024.
Each of the main centres recorded flat to falling prices over the month, with both Christchurch and Dunedin experiencing no change in June, the best performers.
CoreLogic head of research Nick Goodall said the last 12 months could be described as a dead cat bounce, with confidence perhaps misjudging the trajectory for mortgage interest rates.
"Inflation has remained sticky, particularly domestically, as the RBNZ has stayed true to their commitment of using monetary policy to bring consumer prices under control," Goodall said.
"That previous momentum stalled as high mortgage interest rates continue to restrict housing credit demand."
The fall in prices experienced in our biggest city for the past month and quarter came as a surprise with Auckland values falling 1.2 percent in June to take the quarterly change to -2.6 percent.
"We were expecting to see Auckland perform a little bit better than the rest of the country mostly due to the strong population growth off the back of high net migration," he said.
Prices in Auckland were 17 percent off the peak, with Wellington prices 19 percent off the top of the market.
Borrowers shopping for better deals
Growing numbers of people are swapping banks in the hunt for better mortgage rates as the property market confirms signs of weakness.
Corelogic data shows 24 percent of new residential mortgage lending in May was from borrowers changing banks.
That was the second largest share on record of borrowers changing loan providers since March 2023 - when 26 percent of new mortgage lending was associated with refinancers switching banks.
Goodall said customers were prepared to shop around for rates cuts.
"Banks are having to fight hard for their mortgages at the moment," he said.
"This change illustrates the persistent low levels of real estate transactions as a source of new mortgages for banks. With such a competitive lending environment, it's no surprise to see borrowers seeking out the best deal as lenders work hard to retain borrowers and attract new customers away from their competitors."
RNZ
