According to The Press' Liz McDonald, New Zealand's current housing sales slump is the worst on record, with Christchurch particularly hard hit by price falls, with more pain forecast for sellers and real-estate agents.

The depth of the fall is detailed in an overview of the housing market from Sydney-based mortgage insurer QBE and New Zealand business researcher Infometrics.

The report found nationwide home sales in the first half of this year were down an unprecedented 44.3% on the same period last year. The previous biggest slump was recorded in the second half of 1974 during the oil-price shock that started in 1973.

The report lays the blame on higher interest rates, the economic recession, rising food and fuel prices, and the impact of drought.

Christchurch sales fell 32.4%, less than the national average, but the city's 4.5% price drop in the year to June was the worst in the country.

Provincial Canterbury and Westland prices fell just 0.4% in the year to June, with a drop in sales in line with the national average at 34.1%.

The fall in both sales and construction of new homes has forced real-estate agents to leave the industry and sent some house-building businesses to the wall.

QBE chief executive Ian Graham said with interest rates dropping and house sellers lowering price expectations, sales volumes should recover.

The report predicted the worst house-price falls may be over in Christchurch, with the city due for the smallest prices drop in the country of just over 3% in the year to June, along with Hawkes Bay.

However, more pronounced price falls are forecast for Otago/Southland, Nelson/Marlborough and Northland.

Figures from the Real Estate Institute last week showed homes were selling faster than they had for six months, something ASB bank economist Jane Turner said could be an indicator of market improvement.

However, Lincoln University property professor Chris Eves put that down to a rise in auctions, and said recent price falls not included in QBE's data meant the market was worse off than it appeared.

Infometrics senior economist Gareth Kiernan noted that the drop in house prices in the year to June was the first since 2001 to go right across the country.

Kiernan said the country's annual price growth could dip as low as minus 10% early next year, with prices forecast to fall 5.8% by June 2009.

The QBE report also predicted some "accidental landlords" owners who had opted to rent their properties rather than sell would sell their properties next year, giving the market a boost.

It said rental returns, driven by strong national demand, were at their highest in over three years around the country, with rental growth in Christchurch stable at 5.6%.

Eves said further falls in interest rates and investors turning to property could support the market next year and help halt mortgagee sales.

However, he expected little confidence in the market soon, with buyers "still feeling very nervous".

He recommended first-home buyers buy now.