The man was found guilty of two representative charges of sexual conduct with a child under 12 after a three-day trial.
Despite the verdict, Judge Anna Johns did not formally enter a conviction, and granted the man bail until sentencing.
If he is found guilty at the second trial, it is understood he will be sentenced on all matters at the same time due to the similarity of the charges.
The girl lives with her grandparents and other family and they have all been affected.
"It's like a prison. She can't have any friends over, I won't let her play outside or go up and down the driveway," her grandmother said.
"I won't let her do anything. She hates it, she hates us for doing it. But it's for her own good."
The girl's aunt said knowing the abuser was so close had caused the family a lot of stress. "It's torture. We are being tormented. The pain is ongoing for us ... It makes you feel sick," she said.
The girl's family want to know why the judge did not bail the man to another address.
"It's not like he had nowhere else to go," her grandmother said.
She and the family hated going up and down the driveway or outside the home as they never knew when they would see him.
He was often outside and the family felt he was watching them.
"It's mentally attacking us all of the time," the aunt said.
"It feels like we are trapped. He is just able to roam free and he's made it hell here."
It's torture. We are being tormented. The pain is ongoing for us.
The grandmother said the delay in sentencing was frustrating, but having the man living next door until then was adding insult to injury.
"We took our granddaughter on to give her a better life, and then this happens to her," the grandmother said.
"A victim shouldn't feel like they have to move."
The Weekend Herald requested the man's court file, in particular the transcript of discussions relating to bail and the reasoning behind the decision.
Judge Johns refused the request on the basis that "I have not entered a conviction for the ... offending".
A Justice Ministry spokesman could not release the information "as the judge has made an order denying media access to the court file".
He said the office of the Chief District Court Judge had advised that the man had been on bail at the address since his arrest in 2014 and there had been no breaches of bail.
Justice Minister Amy Adams would not answer questions about the case, including whether she would be comfortable with someone who had offended against her or her family living in such close proximity.
"Decisions about bail are made by judges based on the law and the circumstances of each case," a spokesman said.
"Judges are independent of the Government and therefore it is not appropriate for ministers to comment on judicial decisions or matters that are currently before the courts."
VICTIM ADVOCATES: Judge's decision wrong
Family First NZ said Judge Johns' decision was "idiotic".
"A situation like this simply re-victimises the child, is hugely traumatic for the family trying to recover from the offences committed previously, and sends a message to the community that the rights of offenders are greater than the rights of victims," said spokesman Bob McCoskrie.
"Bail is a privilege, not a right - and it should not be granted at the expense of the victims and their families.
"For this horrific child abuse, the offender receives a punishment of celebrating Christmas at home, while the abuse will impact on the child for the rest of her life."
Family First NZ is seeking permission from the victim's family to write to the Solicitor-General and the Minister of Justice requesting a review of Judge Johns' decision.
"The justice system in New Zealand is perpetuating the problem of child abuse by handing out 'wet bus ticket' decisions and sentences in response to cases of serious child abuse," Mr McCoskrie said.
"It appears that the justice system in New Zealand simply doesn't value the welfare and protection of our vulnerable young children - based on this decision. Put simply, it is an idiotic decision.
"As a community, we are trying to say that the abuse of our young and most vulnerable is completely unacceptable and that our responsibility as adults is even greater around these young children - yet the consequences given out by the courts are completely undermining that message."
Ruth Money, who helps victims through the court process, said Judge Johns' decision was "an absolute disgrace".
"The facts of this case are overwhelming - she has absolutely made the wrong decision.
"The decision shows she has not learned anything from the Christie Marceau case and bail amendment bill changes that happened as part of that."
Christie, 18, was killed by Akshay Chand in 2011. Months before he stabbed her to death at her home, while her mother desperately tried to call police, he had been charged with kidnapping her.
Despite protests from the police, Christie and her family, Judge David McNaughton granted Chand bail to a house within view of the Marceaus' home.
