Average house prices are continuing to decline around the country, but at a slower rate than past months.

The average home fell 1.5 per cent in the three months ended in July, a smaller rate of decline than in the recent past, according to the Quotable Value house price index.

Values fell 1.8 per cent in the June quarter, 3.5 per cent in the April quarter and saw a 3.4 per cent decline in the May quarter.

The national average house price was $888,999. That was 10.2 per cent lower less than the same time last year, but just 0.3 per cent less than at the end of June.

QV operations manager James Wilson says it will not be unusual to see home values continue to yo-yo for the foreseeable future, largely as a result of reduced sales activity.

The longer term trend is a residential property market that is bottoming out after significant home value reductions over the last 18 months or so, he says.

"But it's still early days and we're unlikely to see the market reach a consistent bottom overnight.

"Instead, we're likely to see significant variations in performance in sub markets across the country, as we see demand return in certain areas and for certain property types at different times. Meanwhile, that heightened level of volatility is set to continue until sales volumes increase further."

Home values continue to diminish in Auckland (-1.5 per cent) and Wellington (-1.7 per cent), with the average rate of reduction increasing in Nelson (-2.4 per cent), Whangārei (-1.4 per cent), Queenstown (-1.3 per cent), and Rotorua (-0.5 per cent).

In last month's index, Queenstown and Rotorua recorded positive growth, reflecting the heightened volatility in the market.

Four of the 16 main urban areas monitored by QV recorded small amounts of positive home value growth in the three months to the end of July - Hamilton (0.1 per cent), New Plymouth (0.4 per cent), Christchurch (0.8 per cent), and Invercargill (0.8 per cent).

First-home buyers remained most active in the market, but investors were beginning to show some renewed interest, says Wilson.

"While investors never removed themselves from the market entirely, they have adopted more cautious attitudes in recent times. Now we're starting to see growing numbers competing for entry-level stock in areas they view as offering good value for money."

Some property types, such as small-to-medium development sites, have taken significant hits in value since the downturn began, and since demand has dropped away are likely to keep falling, he says.

"New building consent numbers are forecast to remain suppressed throughout the year, as interest rates, build rates and overall demand continue to hamper demand."

-RNZ.