"The Housing New Zealand properties are all around $50,000, $60,000 and $70,000 and if you look at December figures, there were a lot of cheaper houses sold which brings the property price down.
"They are selling them in batches with cheap price tags, so when they are that low, they are competing against the houses that are on the market for $100,000 to $150,000."
Mr Ellis said average selling prices were higher than the median property price quoted.
"The average price that we sell is well above the median price quoted by REINZ but overall in Wanganui low-priced housing sales will be bringing the price down."
Housing New Zealand's general manager of governance Greg Groufsky said the state houses were sold at market price.
"Housing New Zealand has sold a number of properties in Wanganui recently. These properties are no longer required by Housing New Zealand due to low or mismatched demand in these areas."
Mr Groufsky said many of the properties have been sold through the First Home Ownership Scheme, which offers to sell surplus state houses to eligible buyers, and all had been sold at market value.
Property Brokers Wanganui branch manager Philip Kubiak has managed the Housing New Zealand property sales and said the first home buyers' scheme would not have dramatically affected the median property price.
"It is one of the best things that has happened in Wanganui's town centre. The value of the properties is set by a registered valuer and they are accurate values," he said.
"To say that the median price is being affected by these properties is a short-term and narrow view. The drop in price in December was because of a couple of mortgagee sales, not necessarily because of Housing New Zealand.
"Ninety per cent of our homes are going to first-home buyers who are moving in and straight away improving the properties and improving the streets and areas where they buy. Immediately, you are going to see an increase in values and that is going to be good long-term for Wanganui."
Owner of The Watsons Real Estate, Ross Watson, also felt Housing New Zealand sales would not have made a huge difference to the median property price - though they had probably been let go at a low price.
"There is probably insufficient sales to make a huge difference in that market," he said.
"Housing New Zealand do have an unfair advantage over a private investor and that is because most of their homes were build in the 1940s or 1950s at minimal cost and they have had them for near-on 60 years so those homes have paid for themselves several times over," he said.
Mr Watson said Housing New Zealand sales had a flow-on impact because investors can buy the houses after they had been on the open market for three months.