The sky will not fall in on the property market on Thursday when the Reserve Banks raises the official cash rate - most banks have already factored at least a .25 per cent increase into their mortgage lending rates.

Property prices in Auckland at least continue to surge, although the rate of increase is easing. Most of the larger regional markets continue to enjoy robust business; although prices in most are holding rather than increasing - and, in some cases, are dipping slightly.

Property experts believe two of three vital factors pushing the city's property prices up remain in place - a shortage of properties, and robust immigration combined with fewer New Zealanders migrating to Australia.

Infographic: Click here to view latest property data from CoreLogic.


The third key factor is record low interest rates. The record low OCR of 2.5 per cent has been in place virtually uninterrupted for almost five years. How much pressure the increases over the next 12 months to 18 months puts on household incomes remains to be seen but Reserve Bank figures suggest any increases will flow through quickly to household budgets.

A staggering 75 per cent of home mortgage borrowers remain on either a floating interest rate or have fixed their rate for less than 12 months. That means rate increases will bite quickly.

Quotable Value figures show the Auckland market increased 14.5 per cent in the last year, and values are 27.2 per cent above the previous peak in 2007. But the Reserve Bank's low deposit restrictions introduced in October have helped slow price increases - nationwide property values increased 0.3 per cent in January, compared with a 1.3 per cent increase in December.

Homeowners can bank on interest rates increasing, and economists predict fl oating rates could be as high as 7.75 per cent by the end of next year. Let's hope highly mortgaged householders are prepared.