Migration is now a key source of demand for housing, the latest ANZ Property Focus report says.
Of the ten gauges the report uses to indicate the future direction of property prices, that is the only one that is now pointing only up.
The rest are either flat or flat, leaning towards up.
“Migration inflows are starting to get some momentum. Canterbury and Auckland net inflows are strengthening,” the report said.
But it said Auckland prices were already out of line with fundamentals such as income and rents, but were still rising at a rate of nearly 20% year-on-year.
It said buyers should make the most of current affordability because mortgage rates are firming and there had been another sizeable jump in fixed rates.
Housing consents had returned to pre-recession levels but a tight inventory of homes for sales was still pushing up prices.
Overall, the report said the pressures on the housing market were balanced, or pushing up. “All eyes are on October’s introduction of speed limits on high LVR lending. The brakes are already being applied.”
ANZ’s economists said the limits would need to be followed up with hikes in the official cash rate over 2014 as the economy gained strength and inflation pressures build.
“Momentum in the housing market is starting to spread beyond Auckland and Canterbury. Housing construction has picked up and will eventually help reduce pressure on prices, particularly in Auckland. But it’s a long haul, and meanwhile, we have the Canterbury rebuild in the backdrop.”