Optimism in Tauranga City's property market is brimming as the city records another slight rise in property values and sales, particularly in Otumoetai and Mount Maunganui.

Quotable Value's latest monthly figures for May show the city's values are experiencing a 5.1 per cent increase on the same time last year and are up 2.3 per cent on the last three months.

The Tauranga property market is looking positive continuing an upward trend this week.

The average current value for a residential property now sits at $450,614, slightly ahead of the $449,331 in April, but the market remains 6.4 per cent below the peak of 2007.

In the Western Bay of Plenty, average house prices are $417,637 - increasing 5.1 per cent since last May and 2.3 per cent in three months.

QV registered valuer Mairi MacDonald says the figures show Tauranga's market is steady and increasing slightly with a 'positive feeling” in the market at the moment.

'Well located higher end properties are selling well, such as Otumoetai and Mount Maunganui. Papamoa also has good new housing developments that are selling well, as are properties at The Lakes development near Pyes Pa,” says Mairi.

'In the entry level market end of the market for properties in the mid $200,000s activity appears to have slowed and sales volumes are slightly down due to less first home buyers active in the market.”

'There is still good demand for this level of property however and the rise in interest rates don't seem to have had an impact yet.”

Nationwide residential property values have increased 8.2 per cent in 12 months, and 0.7 per cent in the last quarter.

This means they are now 13.9 per cent above the previous market peak of late 2007.

When adjusted for inflation the nationwide annual increase drops slightly to 6.6 per cent and values remain below the 2007 peak by 2.2 per cent.

QV national spokesperson Andrea Rush says the national picture is quite mixed despite nationwide values increasing for the second month in a row coupled with a slight decline in March.

'Whilst values in all the main centres have increased to varying levels, some areas within the cities are showing decreases and values in many of the smaller regions are flat or decreasing,” says Andrea.

'Sales volumes around the country are 10 to 15 per cent lower than they were this time last year which could be a normal winter seasonal effect but it could also be a precursor to values dropping.”

Andrea believes the LVR lending restrictions continue to have an effect in many of the regions with activity significantly slower at the entry level end of the market.