The value of the average New Zealand home plummeted by more than 2 percent in the three months to April after a drop of 0.6 percent in the quarter to March.
According to QV, rising interest rates were piling increasing pressure on the housing market.
QV's latest house price index shows the national average value of a New Zealand home sits at $1,040,927 - down 2.2 percent over the quarter.
In the Auckland region, the average value was now $1.49 million - falling 3.1 percent over the past quarter. Annual growth was 18.6 percent in March but that dropped to 14.2 percent last month.
"It's no surprise that the largest declines are occurring in locations that experience the strongest growth over the past couple of years," QV general manager David Nagel said.
"These markets were the first to become overheated and that makes them more susceptible to a value correction as rising interest rates, tightening credit and affordability concerns start to kick in."
He said real estate agents have reported declining attendances at open homes and falling auctions clearance rates, showing a balance tilt between buyers and sellers.
"A big part of the three-month value reductions occurred in late March and April so we expect to see a gradual escalation of value declines in the coming months as vendors wanting to sell their properties are forced to meet the market."
Eleven of the 16 locations QV watches showed a decline in the rate of quarterly value growth from its March statistics. The likes of Marlborough was still steady while Queenstown was the only centre to register a value growth rate increase.
"It's difficult to see things getting better any time soon with interest rates forecast to rise further in response to inflationary pressure, while net migration is likely to be negative for the rest of the year as the borders open up," Nagel said.
"Fortunately we have a well-insulated banking sector with LVRs (loan to value restrictions) having been in place for much of the past cycle and with the country at almost full employment. The likelihood of wholesale mortgage defaults is low."
He added it was likely house listings would continue to outstrip demand in most New Zealand towns.
But according to CoreLogic, the share of houses being sold to first home buyers has dropped sharply despite the property market downturn.
CoreLogic chief property economist Kelvin Davidson said in a statement some first home buyers have probably pulled back due to tighter lending rules.
With those tighter lending rules and rising interest rates, the first home buyer share dropped to 22.5 percent in the first quarter of this year - compared to 26 percent in the second half of 2021, CoreLogic's twice-yearly first home buyer (FHB) report shows.
"Of course, that doesn't come as a major surprise, given housing affordability is still very stretched with between 11 and 12 years required to save a deposit in some areas of the country," Davidson said.
"Mortgage interest rates have risen sharply and the tightening of lending criteria has bitten hard for those with low deposits and/or less disposable income."
Davidson people looking to buy their first home haven't been able to keep up with the market.
"Some FHBs will no doubt be able to secure some bargains in a market where the supply/demand balance has tipped in favour of buyers," he said. "But this won't be enough for plenty of others, who will continue to struggle with the loan-to-value ratio rules and the higher mortgage rates."
CoreLogic expected first home buyers to be more restrained in the housing market this year, Davidson said.