Recent data shows the downturn in property prices is well underway. Whilst the big picture is clouded we are seeing some major shifts. In Auckland the median price was down 6% from December with Auckand city down a whopping 15%. Now sales volumes are at seven year record lows which impacts on the numbers but the reality is quite clear: the market has had a vicious turn and no amount of talking it up is going to help.

What is off major concern is the knock on effects. These will be felt over the next 6 months especially with interest rates continuing to bite. Yet some economists are looking for further rate rises.  The recent drought is expected to eat into farmers’ recent windfall gains from commodity prices rises.

So the Reserve Bank needs to look through this inflation blip and focus on the impacts of the credit crunch and falling house and land prices.  And banks have a responsibility not to pull the plug too quickly but work with people and businesses if they get into trouble.

It’s a tough time to be exposed in property.