The number of forced property sales in Hawke's Bay nearly halved in the final months of last year and were down during 2012.
Latest figures from Terralink International show 11 mortgagee sales occurred in Hawke's Bay in the three months to December, down from 20 during the previous quarter.
Sixty-nine foreclosures occurred during the year, down from 80 in 2011.
Murray Keane, chairman of the Hawke's Bay Real Estate Institute of New Zealand, said the decline was encouraging.
"I thought they were actually dropping further," he added.
Listings for mortgagee sales were featuring less in local property magazines, he said.
Prices and sales volumes had improved in the past year, Mr Keane said.
Agents were also reporting better attendance at home viewings.
Nationally, the number of mortgagee sales slumped to a four-year low in the three months to December.
There were 461 forced sales, or 11 per cent less than during the previous three months and 24 per cent less than the same quarter in 2011.
Forced sales for the 2012 year totalled 2106, 30 per cent down on 2009 at the height of the recession. Terralink managing director Mike Donald said Auckland's property market experienced the largest drop.
In 2007, 42 per cent of foreclosures occurred in Auckland. This declined to 21.5 per cent in the December 2012 quarter.
Auckland's buoyant property market is being credited for the fall.
"The supply and demand situation in Auckland means any financially distressed home owners there have a much better chance of selling their home quickly, and at a good price," Mr Donald said.
"Consequently, they are much less likely to face a forced sale by the lender."
While Auckland mortgagee sales have declined, a wider regional breakdown shows foreclosures were up in Marlborough, Taranaki, Waikato, Canterbury, Nelson and the Bay of Plenty.
About 78 per cent of mortgagee sales occurred in areas outside of Auckland during the December quarter, up significantly on 2007 figures.
Meanwhile, investor-owners (those who own between three and five properties) accounted for nearly a third of mortgagee sales in the December quarter, slightly up on the previous period.
In contrast, individual mum-and-dad property owners made up just 15 per cent of foreclosures as fewer cash-strapped families lost their homes.
Mr Donald said the downward trend indicated "an end to the volatility which has characterised the last four years".
"This is encouraging news for property owners after a long period of difficulty and pressure."
New Zealand Bankers Association chief executive Kirk Hope said mortgagee sales made up a "tiny fraction" of the total mortgage market.
"Of the 1.4 million residential mortgages in New Zealand, there were 2106 mortgagee sales in 2012.
"Mortgagee sales account for less than 0.2 per cent of all mortgages."