Rotorua property values might be ''flatlining'' but while demand continues to outstrip supply the market is expected to pick up, local agents say.

The latest QV House Price Index released today shows Rotorua's average residential property value for December was $412,741. That's an increase of 0.3 per cent compared to three months ago - while the national value increased by 3.6 per cent over the same timeframe.

Simon Anderson, chief executive of Realty Services, which operates Eves and Bayleys, said the market had returned to normal following a steep lift in prices over the last two years.

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''We have seen a levelling off of that lift so it's a flatlining of that appreciation.''

The number of sales had also dropped off significantly although demand was still strong, he said.

''There is a real shortage of listings across Rotorua and that will affect values but there are some subdivisions going on so that will meet that demand.

''I think it will be steady as we's going to be interesting to see what happens when everyone is back at work and things start picking up again.''

He said activity in the $400,000 to $600,000 price range was strong and ''we have seen some great activity in the lakes market''.

Professionals McDowell Real Estate co-owner Steve Lovegrove said there had been a stall in market activity in the last three months of 2017 due to the election and the banks tightening lending criteria.

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''That slowed down enthusiasm and people's confidence to pay a bit extra for a property. But I believe we will see an influx of listings and there is already a strong flow of buyers in the market.

''I'm extremely optimistic...I think we will see more activity and we have had a great start to the year already. Rotorua continues to grow in popularity and we have had inquiries from people outside the region.''

LJ Hooker Rotorua principal Malcolm Forsyth said inquiries had not let up through Christmas and it had been a phenomenal start to January.

''It's been insane and really busy. There has been a lot of talk about Auckland and the regions going off the boil but we are not seeing that.

''I think 2018 will continue on and we are hearing talk from the financial sector that interest rates won't change much.''

More properties were coming onto the market and ''there is a very positive feeling at the moment'', he said.

QV National spokeswoman Andrea Rush said the frenzy in the market of the previous three years induced by high numbers of investors in the market subsided and ''we saw a return to more normal levels of activity in housing markets around the country''.

The slight easing in LVR restrictions by the Reserve Bank due this month was likely to help improve activity and demand in housing the market as we moved through the summer months, she said.

"Low interest rates, relatively high net migration and lack of supply means market drivers remain and we are likely to see values hold for the most part during 2018 in the main centres but the trend of lower rates of growth is likely to continue.

"Some regional areas may continue to see stronger value growth than the main centres during the year."

By the numbers
Rotorua: average current value $412,74 -3 month change .3 % - 12 month change 10%
Tauranga: average current value $693,725 - 3 month change 1%-12 month change 3.2%
Whakatane: average current value $414,658 - 3 month change 1.1% -12 month change 11% - Source QV