House prices don't look set to rise any time soon, according to the latest ANZ Property Focus.
The ANZ Property Gauges, which uses 10 indicators to measure the state of the property market and for signs of change that will impact on house prices, reported overall downward pressure on house prices in June.
Rising interest rates is the biggest negative factor influencing the market, with affordability, serviceability and liquidity all showing a negative impact on house prices as a result.
The Official Cash Rate (OCR) hike earlier this month and subsequent upward movement of floating and short-term fixed interest rates have dented affordability for new entrants into the housing market and although existing borrowers continue to pay down debt, demand for credit is still subdued and households continue to deleverage.
Building consents and house sales look to face headwinds in the future, according to the report, with house sales still low as uncertainty weighs and although consents have picked up slightly, they still have a way to go towards recovery.
Supply and demand remains out-of-kilter and although dynamics are looking positive in this regard, credit and de-leveraging are more dominant in terms of impact on house prices.
Mortgagee sales have dropped, indicating there are less desperate sellers out there.
Currently there are no signs of upward pressure on rents, according to ANZ, despite announcements in the Budget on GST increases and the loss of depreciation on buildings, the excess costs of which are expected to be passed on to tenants eventually.
Migration is easing and although there is still a slight inflow, gains are easing fast and the gauges peg the indicator as being neutral for house prices.
ANZ says New Zealand appears to be taking the opportunity to get its house, or balance sheet, in order and how long this continues will be one factor influencing how quickly interest rates will rise.