Values of residential property in New Zealand have continued their gradual decline in October 2010 and are now 5.5% down from the peak of late 2007, according to QV Valuations.

After the market peak, values dropped nationally during 2008 to a low in early 2009, before showing a recovery up until early 2010, when they began to decline again. In the last 12 months values first rose 2.8% from October 2009 to March 2010, but have fallen back by 1.6% since March. As a result, values were still 1.1% above last year, but that gap continued to close.

Jonno Ingerson, research director at QV, said: "The low level of sales activity we have seen all year continued through October, with sales well below both last year and the long term average. There is no sign of the traditional spring surge in sales, and we dont expect any significant increase in sales before the New Year."

QV did not include Canterbury in their report as there were too few sales since the magnitude 7.1 earthquake on September 4 2010 to generate a reliable index to measure, however the local property market has begun to recover after sales slowed dramatically post earthquake.

Melanie Swallow of QV Valuations, said: "We have seen a small lift in property values across Christchurch city over October, but only in suburbs where there has been little or no earthquake damage. In such areas, agents report demand for quality housing, with some healthy sale prices being achieved."