In the bank’s latest Property Focus, economists expect house prices to find a floor about the turn of the year, paving the way for a gradual recovery.

ANZ chief economist Sharon Zollner says all up there isn’t much to get excited about just yet for those anticipating a pick-up in the housing market from lower interest rates.

“The ratio of sales to listings provides a good indication of near-term house price dynamics and suggests that a further correction lower in house prices is likely before the backlog of stock on the market is cleared,” she says.

And while it’s still too early to see an impact of lower interest rates on house sales, anecdotal evidence in recent weeks has pointed to a pick-up in activity. “That said, it’s typical to see a pick-up in activity heading into spring, which means caution is warranted when interpreting these anecdotes.”

On the data front, Zollner says the weekly Auckland auction clearance rate is a timely and useful leading indicator of changes in housing market momentum.

Under the hammer

Barfoot and Thompson’s Auckland auction clearance rate has bounced, highlighting the possibility the housing market could be spurred back to life quickly as interest rates fall. This indicator tends to lead house sales by around three months and pick turning points in house prices about six months ahead.

“Mortgage rates have continued to head lower over the month, driven by falls in wholesale rates as financial markets have ratcheted up bets that the RBNZ will step up the pace of OCR cuts to a 0.50 per cent move,” Zollner says.

“That’s not what we’re expecting, but it’s worth remembering that faster cuts from the RBNZ would likely occur in response to the economy underperforming its already low expectations. In that scenario, lower interest rates may not be the boon for the housing market that many assume.”

The forthcoming September REINZ report will be the first full month of data following the RBNZ’s August OCR cut, and it also marks the beginning of spring, a time when housing market activity tends to lift.

“Whether we see the usual spring bounce will give an early indication of the how the housing market is responding to lower rates and give us a better sense of the risks around our forecast – and the Reserve Bank’s, which is meaningfully weaker than our own.”