In their latest Property Focus report, they say that affordability is declining because of rising interest rates, which are a key driver of the property cycle.

This was likely to continue, which would slow the housing market, they said.

As a proportion of income, mortgage repayments are back to a four-year high and are approaching the 50% level.

Of the ten gauges they use to determine the likely direction of the housing market, only migration is pointing purely up. It is currently at a 10-year high and climbing, as fewer New Zealanders leave and more people move to this country from overseas.

Interest rates, serviceability, affordability, housing supply and globalisation were all factors pushing prices down, the report said. Rising mortgage rates were starting to bite and New Zealand’s time at the top of the global table was over.

Factors keeping prices stable were LVR rules and liquidity.  “The bottom 60% of the market has clearly experienced a sharper drop in sales since LVR restrictions were introduced. The cheapest 30% of houses – and intriguingly the very top tier – have experienced the most modest price rises. The middle part of the market has largely sailed on," they said.

Median rents and the supply-demand imbalance were leaning towards being factors pushing up prices. The report noted that rents are now growing at a rate of 5% per year and demand has outstripped supply in the market for the past six years.

Overall, they expect prices to flatten as the OCR rises continue.