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Average asking prices for houses for sale in the Central Otago-Lakes District fell nearly 9% in March, along with a 12.4% fall in the West Coast and a 10.2% fall in Marlborough.
While the national asking price rose to a record of $484,263, thanks mainly to rises in Auckland and Wellington, the South Island did not fare so well, according to figures released by realestate.co.nz.
The Auckland asking price rose 0.9% to $683,169 compared with the Central Otago-Lakes price of $608,134.
The two areas continue to lead the country but Central Otago-Lakes has fallen behind Auckland this year.
Average Auckland asking prices rose 12% last year.
Wellington's asking price rose 7% year-on-year to $469,487 and Waikato rose 10% in the period to $393,169.
Realestate.co.nz national marketing manager Paul McKenzie said new national listings in March showed lower levels than historic years with 12,488 new homes on the market.
''This equates to 2% less than the number of new listings seen in March 2013. However, Auckland, Wellington and Christchurch all saw a healthy increase in new listings, providing more selection in the biggest New Zealand regions.''
Of the 14 regions reporting lower new listings than in February last year, the most significant fall was seen in Coromandel and Nelson, 29% and 25% respectively.
Five regions reported year-on-year increased listings. Wellington's was the largest, up 11% from March last year.
Inventory of unsold homes on the market recovered slightly in March, rising 8% from February to 28 weeks of stock, showing the market was starting to see rebalancing.
Due to the rise in listings, Auckland began to see a recovery in inventory, rising 19% from 13 weeks to 15 weeks of stock, he said.
The rise in inventory during the last month was seen in 13 of the 19 New Zealand regions but overall, the market remained firmly a seller's one, Mr McKenzie said.
The market remained well below the long-term average of 37 weeks of equivalent sales.
ASB economist Daniel Smith said the most encouraging sign from the March data was a lift in availability in both Auckland and Canterbury, the regional markets under most pressure.
But because the data series did not go back a long way, the seasonal adjustment that is applied by realestate.co.nz should not be relied on totally.
''There does seem to be a seasonal element to the adjusted Auckland listings data, in particular. But to see the number of homes coming on to the market lifting back towards the levels seen before the Reserve Bank's LVR restrictions came into effect is encouraging.''
There had been a significant drop-off in listings over the first few months under the restrictions, he said.
Mr Smith expected house price inflation to ease this year as interest rates rose and more supply became available.
But it would take several years for supply constraints in Auckland and Canterbury to be fully addressed, the key being continued growth in construction activity.
ASB expected the Reserve Bank to lift the official cash rate again in April, July and December this year, on the way to a peak of 4.5% by the end of 2015.