Up to a thousand heavily discounted inner-city apartments are about to hit Auckland’s already slow property market.

In better economic times, buyers had bought apartments off-plan that are now achieving valuations of just half of those achieved when buyers handed over their deposits a year or two ago. Given today’s lower valuations, banks will not lend the full amount of money the buyers need to complete the purchase at the agreed price.

Distressed owners will therefore be forced to sell at heavily discounted prices, warns Martin Dunn of CitySales in today’s Dominion Post. Dunn believes many owners of newly finished apartments will be unable to meet their obligations and the apartments will be auctioned by banks.

Mr Dunn said an inner-city apartment that sold off-plan for $750,000 several years ago was likely to fetch just $200,000 today.

Taking a broader view, the Reserve Bank of New Zealand is expected to cut its headline interest rate to 2.5 percent this week, down from the peak of 8.25 percent which prevailed between mid-2007 and mid-2008.

The property market is a vital part of the New Zealand’s economy, comprising around seventy percent of the country’s net worth.