A "do-nothing" sentiment is gripping the property market and the number of house sales is down a third from a year ago, says the valuation agency QV.

Its July index, issued today, shows house values are 4.1 per cent above the same time last year.

But values in main centres have been falling since March, and are 4.7 per cent below the market peak of late 2007.

The national average house sale price rose to $407,191 last month - from $404,715 in June - but this was because fewer lower-value properties were sold.

A lack of demand and an increasing number of unsold houses were pushing values gradually down, said QV.

"It's an easing, rather than the plummet in values we saw in 2008," said QV research director Jonno Ingerson.

The number of house sales was down about a third from the same time last year and was a third below the long-term average.

"We are now approaching similar levels of sales as during 2008 at the height of the recession," said Mr Ingerson.

"It's not that people are negative about investing in property. It's more a case of 'do nothing'.

"There is lack of competition between buyers and buyers, combined with an increasing supply of unsold houses."

Many people had decided against being active in the property market, and were focusing instead on repaying debt.

"But people who want to get into the market are finding it harder to get bank loans.

"The banks are a lot more careful about who they lend to, and insist on reasonable deposits or equity levels."

Traditionally, the market is slow over winter but revives in spring.

Mr Ingerson doubted whether that would happen this year.

"I feel the midwinter gloom might continue for a few months yet. There are a few dark clouds on the horizon.

"Valuers say people are worried about job security and interest rates rising. People are waiting to see what the tax changes are going to do for them."

Auckland region values are 6.9 per cent above last year. A month ago they were up 7.9 per cent on last year.

QV's Auckland practice manager, Glenda Whitehead, said values had eased in Auckland because the market had adopted a "wait and see" approach since the start of the year.

People thinking of selling were holding off for a better time, which caused a shortage of homes for sale in popular pockets of Auckland, North Shore and Manukau.

The mood of caution about interest rates and job security was causing property owners to seek advice about values before deciding whether to sell, hold, renovate or extend their home.

Recent declines in values in Wellington City mean values are now only 1.8 per cent above last year's.

Values have been flat in Christchurch and are now 4.6 per cent above last year's.

Dunedin values are 3.7 per cent above last year's, down from 5.8 per cent last month.

But values in Hamilton and Tauranga have been stable for the past year. Hamilton's house values are only 0.3 per cent above last year's, and Tauranga's 0.5 per cent.

Values in most provincial centres remain above those for the same time last year, although the gap is closing.

Napier (4.7 per cent), New Plymouth (4.3), Wanganui (2.6), Palmerston North (2.3) Nelson (3.1) and Invercargill (5.3) are all above last year's.

Rotorua (1.4 per cent), Gisborne (0.6) and Queenstown Lakes (minus 0.2) all have values similar to those at the same time last year.

Values in Whangarei have been dropping since late last year and are 2.6 per cent below those at the same time last year.

The ASB Bank's housing confidence survey, also released today, says fewer people expect house prices to rise and most expect mortgage rates to increase over the next 12 months.

The survey, for the three months to July, found 19 per cent of those questioned expected house prices to increase in the next year - down from 35 per cent in the previous quarter - and 71 per cent expected mortgage interest rates to rise in the same period.

ASB chief economist Nick Tuffley said housing confidence was unchanged during the three months to July, and a net 29 per cent of respondents still felt now was a good time to buy a house.

"Expectations for further rises in house prices have fallen across the regions, particularly in Auckland.

"Almost three-quarters of respondents expect interest rates to rise. This result is in line with recent data showing signs of a continued slowdown in housing market activity."

The median number of days taken to sell a house had continued to rise, and was above the long-term average.

Mr Tuffley said the bank expected the outlook for the housing market to remain subdued because of waning turnover.

Beyond this year, it forecasted weak house price growth, tempered by population growth and net migration gains.

Families feel pain of forced sales

An increasing number of family homes are going through mortgagee sales.

Figures issued yesterday by property information company Terralink International showed 264 mortgagee sales in May, 18 more than in April.

Managing director Mike Donald said 50 per cent of mortgagee sales in May last year were of properties owned by individuals, rather than businesses.

This was up to 62 per cent in May this year.

One in five of those sales was someone losing their only home.

"We all thought last year was a bad year for mortgagee sales when we reached record-high numbers," Mr Donald said.

"Most of those were property investors who had over-extended themselves.

"This year, the pain has shifted to ordinary families."

- NZPA