Quotable Value expert says activity is picking up and investors are starting to return to the market.

The Reserve Bank's measures to curb rising house prices may have had an impact with the latest Quotable Value figures showing the Auckland market has fallen over the past three months.

But the pause is likely to be short-lived according to QV's Auckland specialist, who says activity is picking up and investors are starting to return to the market.

QV Homevalue registered valuer James Wilson said it was difficult to pinpoint whether it was Reserve Bank restrictions or new IRD rules that had prompted the pause.

But it appeared a combination of the two was enough to send buyers, and particularly investors, into wait-and-see mode.


The data for February showed houses prices were up 11.6 per cent on the same month a year earlier.

The Auckland market was up 17.8 per cent year-on-year but had decreased 0.7 per cent over the past three months.

The drop in Auckland follows new loan-to-value ratios introduced by the Reserve Bank on November 1 to target investors. A new IRD "bright-line" test to strengthen the definition of an investor for tax purposes was also introduced by the Government on October 1.

The Auckland price fall failed to impress ANZ chief economist Cameron Bagrie, who didn't see it adding further fuel to the case for a Reserve Bank interest rate cut next week.

Auckland was moderating but the rest of New Zealand was picking up, Bagrie said. "I think the housing market is still a reason for the Reserve Bank to pause."

However, Bagrie and other bank economists are picking the Reserve Bank will have to cut rates again this year --although not necessarily next week when it releases its latest monetary policy statement.

Ongoing global uncertainty, a slowing Chinese economy and the commodity slump were the reasons that ANZ was picking further cuts to the OCR this year, Bagrie said.

The increased risk in global markets would start to raise the cost of borrowing for local banks.


"The reality is that if the Reserve Bank doesn't start to cut rates in the next three to six months I think we are going to see borrowing rates start to shift up," he said. "A cut now is not going to mean lower [mortgage] rates, it's just going to neutralise the pressure for rates to move up."

QV's Wilson said he felt the fundamental drivers for growth in Auckland remained unchanged. "Economics 101 is supply and demand and it is a long-term game to address those issues in wider Auckland," he said.

"It's only anecdotal but the word on the street that we're picking up is that investors are now looking to re-enter or have already re-entered the market. That wait-and-see mentality appears to be subsiding quickly."

When the market changes the way it has done in the past three or four months in Auckland it takes a while for the statistics to reflect the trend, he said.

While prices had come down in Auckland over the three month period, only parts of the city -- central Auckland, North Shore, Waitakere and Manukau -- had shown the decrease. The outer fringe areas such as Franklin, Papakura, Rodney were still showing marginal increases.

Likewise, provincial regions around Auckland were still experiencing some overflow effect with strong rises in Tauranga, Hamilton and Whangarei.

Yesterday's data also showed Wellington rising again after a long period of stagnation -- it was now up 6.5 per cent year-on-year.