Property values in New Zealand continued their decline for the fifth month in a row in August and are now 1.1% down on March 2010 and 5% below their peak in late 2007 according to QV Valuations.

Values are 3.1% higher than in August 2009 having been 4.1% higher in July, compared to the previous year.

Glenda Whitehead, manager at QV said: "The market sentiment remains cautious with little sign of urgency among buyers. There is still a considerable backlog of unsold property on the market although the number of new properties being added to this pool appears to have slowed as potential vendors are choosing to wait until the market begins to show signs of recovery."

The average sales price increased to $409,700 from $404,715, reflecting relatively fewer lower value properties sold over recent months, and despite a drop in sales volume it is still marginally higher than the same period in 2008 during the worst of the recession.

Whitehead continued: "There are early signs of a slight increase in activity as more people are assessing the market and considering their options. The housing market is usually more active in spring although the current economic climate suggest any upsurge this year will be modest. Short of any fundamental change in the market, values are expected to continue to slide slightly.

"The Christchurch earthquake is obviously going to have a major impact on the housing market in that area."

In Christchurch, values are 3.2% higher than 2009, and up 2.7% in Dunedin, whilst Hamilton and Tauranga have both dropped below the same time last year, falling 1.5% and 0.9% respectively. Napier (3.2%), New Plymouth (3.3), Wanganui (4.2), Nelson (2.6) and Invercargill (3.0) all remain higher than 2009