The housing market is showing no signs of a spring pick-up with prices still retreating, fewer sales, houses taking longer to sell, and caution dominating sentiment.

The Real Estate Institute's residential market report shows the house price index, which measures the changing value of properties, fell 0.7 per cent on August, with the annual decline steepening to 8.1 per cent from 5.8 per cent.

One small bright spot was a 1.4 per cent rise in the seasonally-adjusted national median price in September to $811,000, which was 2 per cent higher than the same month a year ago.

"The usual spring lift appears subdued in September, though agents report more first home buyers on the market, and increased attendance at open homes and auctions in some regions," says REINZ chief executive Jen Baird.

Easing prices and reduced competition were lifting interest but for many would be buyers houses were still unaffordable, she says.

"Increasing interest rates, tighter lending criteria, and concerns around the cost of living continue to challenge the pace of the market."

Prices fell in 10 of the 16 regions monitored, with the steepest falls in Nelson and Manawatu/Whanganui, but with solid falls also in Auckland and Marlborough, while prices rose in five regions, and one was steady.

Baird says price expectations of most sellers have moderated, but there are still some who are out of touch with the current state of the market.

"Investors remain largely absent - new tax legislation and rising interest rates have created concern amongst this buyer pool, seeing them step back.

"In light of last week's OCR increase of 50 basis points, bringing it to 3.5 per cent, with further increases expected, we expect sentiment to remain cautious - despite a strong labour market," says Baird.

The number of houses sold was down 10.9 per cent on a year ago, with 4943 sales, although the number sold in Auckland was up nearly 16 per cent.

The number put up for sale rose 12 per cent, but the time taken to sell was 47 days, 10 days more than a year ago.

-RNZ.