Although there has been some recovery in the housing market, though sales remain low and a mood of cautiousness remains, according to the latest ANZ Property Focus.
Real Estate Institute (REINZ) sales volumes rose strongly in November, up 19%, and low interest rates and net migration inflow provided something of a lift, but the level of activity is 65% of the average seen over the prior decade and sales remain very low in relation to the dwelling stock.
The ANZ Property Gauges, 10 gauges ANZ use to assess the state of the market and to look for signs of emerging trends, remained sombre.
Of the 10 gauges only two showed a moderately positive direction for house prices.
Supply-demand balance and consents and house sales both pointed to house prices either rising or remaining at the same level, with the supply-demand imbalance widening and house sales showing a slight rebound.
Of the remaining eight gauges the majority, six, were in neutral territory and two pointed to house price falls.
Among the neutral indicators affordability is back on an improving trend, migration is easing off after sharp rises in October, median rents are inching up and the only change seen in interest rates has been a drop for two-year fixed mortgage rates.
Mortgagee sales remain elevated and globalisation - relative price movements between New Zealand, the US, UK and Australia - has turned the corner with the global momentum in house price growth running out of steam.
Both serviceability/indebtedness and liquidity point to falls in house prices as the de-leveraging phenomenon continues and households continue to focus on repairing balance sheets, stopping credit driving the market.
With the focus on balance sheet repair and the subdued short term economic outlook ANZ expects the housing market to remain soft in early 2011.