The continued housing market slump was one factor cited by the central bank for its decision to leave the OCR at 3%.

RBNZ governor Alan Bollard said "current low interest rates are having a less stimulatory effect than in the past."

"Despite the floating mortgage rate being below its historic norm, activity in the housing market has weakened further."

"While some of this slowing was driven by the earthquake-related disruptions to the Canterbury housing market, reduced turnover was also observed elsewhere in New Zealand. The current level of house sales is consistent with further declines in house prices over the coming months."

QV research director Jonno Ingerson believes that while prices may stay flat, "we don't think they're going to fall a lot further."

He said that a small fluctuation was possible but he "wasn't seeing anything to suggest they'll plummet" in value.

The bank said that with little sign of improvement in the housing market there were concerns further declines would have a negative impact on household spending. Despite signs of global growth and recent employment gains "these downside risks cannot be ignored."

While wholesale interest rates had increased, the Bank noted there has been little change in mortgage interest rates since the September Statement.

"While the floating mortgage rate has risen and fixed rates reduced this year, the mortgage curve remains positively sloped, causing borrowers to continue to favour floating rate loans. As a result, the proportion of floating rate mortgage debt has continued to rise, reaching over 42% for the first tome since early 2000."

The bank also reported a fall in the average time to reprice a mortgage to eight months, down from the high of almost 20 months in the middle of 2007.

Worryingly, despite the bank reporting a recovery in net immigration its said housing turnover has continued to decline and "house prices have fallen further."

The subdued market is also prompting reticence from sellers, "who appear to be holding back from putting properties on the market."

In a pessimistic outlook the Statement says house prices are likely to fall further in 2011, and rise only "gradually" beyond 2011.

Ingerson agreed with the bank that prices won't begin to rise until after 2011, saying that would be when factors such as the undersupply of houses combined with net immigration would boost values.