Figures from the Chartered Institute of Purchasing and Supply (CIPS) have indicated house-building work has sustained the worst blow.
This sector of the market has experienced its eighth successive month of output falls, which has placed it at a record low.
Employment in the building trade contracted at the fastest pace in more than 11 years.
Head UK and European economist at Global Insight, Howard Archer, said the pace of the drop could be attributed to "housebuilders being hit extremely hard, as house prices crumble in the face of elevated affordability pressures, very tight lending conditions and low buyer interest".
Meanwhile, a Bank of Ireland and University of Ulster survey has suggested Northern Ireland house sales have fallen by 50%.
The survey has pointed to a confused market in the midst of very varied pricing.
A mere 1,044 homes were sold in the second quarter of the year, as the so-called 'credit crunch' started to pinch buyers.
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Market prices have varied dramatically. Some semi-detached properties experienced a fall of 20%, while other buildings, such as apartments, reported rises in excess of 20%.
This created an overall 4% drop in NI property prices, recorded over the quarter.
The report has also said the average NI house price looks set to drop by £50,000 by year-end.
In 2007 the average price tag on an NI home was £250,000, this is set to drop to £200,000, according to the UU and BoI survey.
Prices had already dipped to £226,934 during the second quarter of 2008.
There has been a "dramatic change of sentiment" in the buying market, according to the report
The starkness of the latest figures are best illustrated by comparing last years 51% increases, during the market peak, to today’s 4% fall.
The report's authors, Alastair Adair, Louise Brown and Stanley McGreal, said: "This survey highlights that some sectors of the housing market are experiencing appreciable rates of price decline though the overall picture when balanced out suggests that there has only been a 4% reduction.
"But the main impact on the market is in the volume of transactions which have been more than halved over the year."
The report said: "While a correction in the market is taking place, it is important to stress that price levels have not collapsed and the marking down of prices appears to be incremental rather than a one-off correction."
Bank of Ireland Economist Alan Bridle said: "The survey shows that price changes vary widely across different parts of Northern Ireland and across the types of properties, so people should be cautious about making over-simplistic judgments.
"For instance, there are different factors affecting both the resale and the new-build markets.
"Anyone looking for the green shoots of recovery should keep an eye on transaction levels which are likely turn before prices do - but it might be a while," he added.
(PR/JM)
