Rental markets remained static or were generally trending downwards.
The report said some office premises were being under utilised, representing a hidden layer of oversupply.
Estimated vacancy rates for secondary office properties were as high as 20 per cent, according to the report. "The leasing market for most locations is likely to be characterised for a while longer by ongoing higher than average vacancies, often intense landlord competition for tenants and optimistically static rentals."
The long-term outlook looks more positive, with investment in rebuilding Canterbury properties likely to drive up building costs, which coupled with the economic stimulatory effects, should ripple into property values nationally.
High land values and high building costs positively influenced property values in Napier and Hastings between 2003 and 2007, and a similar effect could be felt through 2012 and 2013 as the Canterbury market picks up.
Broadly improved farming returns across the whole sector were fuelling an export-led recovery, though the high New Zealand dollar was impacting exporters and properties.
"The New Zealand dollar has been trading higher than exporters prefer," the report said.
"There are economic push-pull effects - fuel would be more expensive.
"Property values bolstered by overseas buyer competition would be more likely given a lower and more stable currency."
Though forecasts for the rest of this year and next year were difficult to predict, the report suggested signs were positive for a market rebound.
"The outlook overall is better for the economy, confidence and therefore property," it said. "For most categories of property we consider the lion's share of downwards valuation adjustment may be over."
