New Zealand's average house values have dropped 4.9 per cent in the latest quarter and dipped below $1 million for the first time in nearly a year.

The QV House Price Index for last month showed the extent of the housing market correction and decreases in values were shown throughout many areas, although an expert doesn't foresee a lot more mortgagee sales.

Rising interest rates, credit constraints and inflationary pressures caused the drop below $1m for the first time since last September.

The average home decreased in value by 4.9 per cent nationally in the three-month period to the end of July.

The average house value nationally is $989,790.

In the Auckland region, the average value now sits at $1,410,163, falling 5.5 per cent in the quarter.

Wellington's average values fell almost 11 per cent in the same period.

Paul McCorry, QV operations manager, described the changes as "staggering. The almost 30 per cent national growth we were reporting at the turn of the year is now down to just 4 per cent and that is only half the story."

Wellington, Palmerston North and Dunedin had big increases in mid to late 2021. Those gains had now been wiped out and are now into negative growth over 12 months.

That was the first time in a decade this has happened in Dunedin," McCorry said.

Wellington city's average home value dropped by more than $130,000 in the quarter while Hutt Valley and Porirua had values drops of 7 per cent to 9 per cent.

"While those numbers seem jaw-dropping, it's no surprise that the areas that saw the fastest gains towards the peak at the end of 2021 are now seeing the sharpest declines. One of the few exceptions is Christchurch, which had seen almost 40 per cent annual growth by the later months of 2021, but is now only seeing relatively moderate declines of 3.4 per cent for the quarter," McCorry said.

He doesn't see a big number of mortgagee sales looming.

"Following the GFC, mortgagee sales were common as job security was weakened and serviceability became an issue. If there were a lot of mortgagee sales, this current market correction could well tumble into a crash.

The Herald has reported on Ray White Remuera expecting more mortgagee sales and already listing two - in New Lynn and Lynfield, where loans were called in by finance companies not major banks.

McCorry said high employment would boost the housing market.

The most recent unemployment statistics, up only marginally to 3.3 per cent, demonstrate just how tight the labour market is, which is also supporting some wage growth, he said.

Loan-to-value ratios were acting as they had been designed to.

"Stringent LVR restrictions were much maligned by first-home buyers over the last few years but the insulation blanket of a 20 per cent deposit required by the Reserve Bank is now serving its purpose," McCorry thinks.

The Queenstown Lakes District is the only one of the 16 centres QV monitors to record positive growth in the quarter - up 0.2 per cent.

"With the removal of all border restrictions at the end of July, the obvious benefactor will be the tourist capital of the country," he predicted.

Auckland home values dropped an average of 7.7 per cent in the first seven months of this year, including 5.5 per cent in the most recent quarter to July. Waitakere had the biggest decline of -6.2 per cent, followed by Auckland's central suburbs -6 per cent, North Shore -5.3 per cent, Franklin -5.1per cent and Manukau -4.8 per cent.

Northland values fell 4.8 per cent in the quarter, the largest in the Far North down 6.5 per cent followed by Kaipara down 6 per cent.

Nelson values fell 3.5 per cent, the West Coast was down 5.8 per cent, Dunedin 2.6 per cent and Invercargill 2.7 per cent.

Tauranga values dropped 4.9 per cent in the July quarter while the average home value in Hamilton is now $858,401, down 6.8 per cent or $144,717 from the start of this calendar year. It remains 2.9 per cent higher than the same time last year, with negative annual home value growth looking likely in the coming weeks or months.

Rotorua values fell 4.8 per cent, Taranaki was down 2.7 per cent, Hawke's Bay dropped 7.4 per cent and Palmerston North fell by an average 8.7 per cent.