The Auckland cycle has peaked and will probably sit flattish with small rises for a few years, says BNZ's chief economist Tony Alexander.
Writing in his weekly overview he says the two forces causing the flattening are the 40 per cent deposit requirement preventing many investors from buying, and average prices finally reaching a "new temporary equilibrium".
"The market has not flattened because of rising interest rates, recession, a migration collapse or supply surge," he says.
He points to various factors that caused the market to heat up. These include FOMO (fear of missing out) catch-up buying, and well-known issues such as stock shortages, weak construction, and lengthening life expectancy.
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Alexander says prices on average have flattened out with a small downward bias stemming from Auckland (down 4 per cent) while the Christchurch measure has been hit by an oversupply of property (down 3.5 per cent).
Slowing price growth is also evident in Wellington where prices have risen 2.5 per cent the past three months from a 5.8 per cent rise three months back.
"This is actually an environment in which canny buyers can take advantage of the most panicking vendors seeking to relieve their stress by flicking the thing causing it - their unsold property," says Alexander.
City rental prices rise
The number of inner city apartments that Barfoot & Thompson is letting is increasing, says the firm.
New tenancies in the inner city typically peak in February as students get settled.
The realtor says rent for one- and two-bedroom city apartments has gone up 4 per cent in the past year. And a three-bedroom apartment costs $109 more a week.
Average weekly rents for a single-bed apartment, according to the firm, is a hair under $400 a week; two-bed, $550 and a three-bed, $770.