The residential property market looks to have travelled back to 2008, minus "the sky is falling" sentiment and values only easing backwards rather than racing.
The number of house sales in recent months has dropped to around one third from the same time last year and are approaching similar levels of sales seen during the peak of the recession two years ago, according to Quotable Value.
But "unlike 2008, when overwhelming negative sentiment of the global economic crisis drove house values down, we are now seeing more of a ‘do-nothing' sentiment," according to QV research director Jonno Ingerson.
"No body is saying the sky is falling. In fact, our valuers are saying property is largely off the radar for many people."
Values dropped almost 10% from the market peak of late 2007, but recovered some lost ground in the second half of last year. This year, values remain 4.7% below the market peak, although values in July are now 4.1% above the same time last year.
The lack of buyer demand, combined with an increasing supply of unsold houses is causing values to "ease gradually backwards", in contrast to the sharp drops seen in 2008, says Ingerson.
He says an increasing number of people appear to be shelving plans to buy houses and are instead focusing on reducing debt.
"Of those potential buyers that remain active, some are finding it difficult to secure lending from banks, while others feel they are in the driving seat, have time to do their research and only make sharp offers."
QV expects market activity to remain slow over the coming months, with the typical spring surge in activity not likely to eventuate.
"If this is the case then we would expect to see values continue to ease back," Ingerson says.
While values have declined, the average sales price increased slightly from $404,715 to $407,191, largely due to fewer lower value properties selling over recent months.
Ingerson says anecdotal evidence, with the index declining and sales price increasing, that it is the bottom-end properties - mainly investor and first home buyer types - that aren't moving.