The QV House Price Index of house values has experienced the largest quarterly drop in more than a decade.
The national average home dropped in value by 0.6 per cent over the three months ended March, swinging from a 2.3 per cent increase in the quarter ended in February.
"We're seeing quite a rapid decline in the rate of annual growth - especially compared to the early months of 2021, when the market was peaking," QV general manager David Nagel said.
"We're seeing much slower growth months and even some value contraction in early 2022."
The national average value was $1,046,636, which was still 18 per cent higher than a year earlier.
OneRoof editor Owen Vaughan said that the housing market had been dented by home loan restrictions, rising inflation and the outbreak of the Omicron. OneRoof-Valocity house price figures published earlier this month showed that Auckland was bearing the brunt of the slowdown.
"The last time the city's average property value dropped was June 2020, when the housing market was recalibrating itself after a two-month-long lockdown brought on by the arrival of Covid-19.
"However, back then interest rates were at an all-time low and buyer demand was rising. This time interest rates are on the up and the housing market is tipped for further declines."
QV's March data backed up a report this week from CoreLogic pointing to the market downturn.
Nagel said the major centres were most affected by the downturn, with average values falling 1.5 per cent in the Auckland region.
"If you look at just March in isolation, there are now nine of the 16 urban areas showing a value decline, including the main centres of Auckland, Hamilton, Wellington, Christchurch and Dunedin," Nagel said.
"Last month we saw just two major urban areas register a reduction in value levels over the three-month period to February, but this month we've seen seven of the 16 areas showing a reduction in value levels."
The volume of sales had also levelled off, while the number of listings had increased.
"With the massive rise in listings over the past couple of months the balance of power has shifted firmly into the hands of buyers, after such a prolonged period of it being a sellers' market," Nagel said.
"We'll likely see a continued gradual decline in value levels for some of the locations that experienced the greatest value growth between 2000-2021, while the regions will likely continue to see a mix of stagnated growth over the coming 12 months."