The current economic issues of continued high inflation and the associated relatively high interest rates have combined with high levels of economic uncertainty to impact the property market.  Inflation is currently at 3.3% and building costs having risen at their fastest pace for a number of years. The Reserve Bank had been holding interest rates as part of its inflation control measures but recently dropped the cash rate from 5.5% to 5.25% with further rate drops possible.

The past six months have seen an increased volume of properties coming to the market without a corresponding increase in prospective purchasers.

At the date of valuation, most sectors of the property market could be described as being in favour of purchasers, reflecting the reasonably high volume of properties for sale and only limited interest from the buyers. Value levels are perhaps sliding sideways and, in some instances, have the potential to decline.

Current drivers of the housing market:

• High interest rates with the expectation that they may fall in the medium term.
• Easing/changes to Reserve Bank lending restrictions.
• Buyer reluctance to commit to purchases.
• An increase of stock / listings.
• Increasing construction costs however stabilising of late.
• High levels of migration and owners moving to lower value situations to downsize their mortgages.
• Continued low business and consumer confidence.
• Considerable reduction in building consents.

Property values appear to have stabilised after a period of falling values, however it is not anticipated that they will noticeably rise in the medium term.

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