"There will inevitably be more upward pressure on rents and more debate about affordable housing," he said.

"For renters it means no end in sight to bidding against each other, rising rents and eventually the return of more investors to the Auckland housing market."

Interestingly, Alexander sees the increased investor focus on Auckland leading to a ripple effect that will spread to other main centres.

"After that happens [increased investor activity in Auckland] the search for yield and presence of accrued capital gains to borrow against will see these investors taking a look at other centres."

Alexander dismisses the argument for opening additional land for development to ease the housing shortage, citing two main factors.

He says people come to or remain in New Zealand largely because they like the current living arrangements which offer easy access to rural recreational environments.

Also, New Zealand's smaller population spread across a country the size of Japan results in high infrastructure costs per person.

"We cannot afford the mass transit systems - train, wide motorways - needed to allow efficient sprawl of people."

He says the end result points to one conclusion as far as Auckland development goes - "it goes vertical."

In what could also be a hint to investors looking for potential hot spots he says developers with an eye for the future, "will want to secure land not too distant from the city centre, not too far from an existing transport node, and perhaps in an area which the council may have indicated will be favoured early on for compacting."

"It was an extremely positive start to the year."

Thompson said that while the traditional dip in activity over Christmas, New Year and annual holiday breaks was present in the trading figures, on every key measure January 2012 was "significantly" ahead of the year earlier.

"The average sales price at $529,768 was up 2.7%, sales numbers at 683 were up 21.3% and new listings at 1031 were up 15.1%."

January 2012 also bucked the trend for quieter sales at the top end of the market, with Thompson saying they sold 40 homes in excess of $1 million.

"We have not sold that many homes in that price category in a January since the peak year of 2007."

He said such high value homes were subject to different market drivers than the rest of the market and he expected demand to remain strong.

Barfoot & Thompson had 4,766 properties listed at the end of January, and while 4% higher than at the end of December, Thompson said it was the lowest number of listings for this time of year for four years.

"Limited choice has been a feature of the market now for the past seven months," he said.

Thompson said he expects to see trading in the first quarter of 2012 continue from the pattern of the last half of 2011, with gradual and modest price rises and the number of holds sold monthly remaining between 700 and 900 properties.

"Buyers and sellers are taking a measures approach and it will result in the market remaining stable and positive."

Its research "shows that permanent and long-term migration to and from New Zealand has followed a cyclical pattern over the past 60 years and current patterns are consistent with the long-term trends," Labour and Immigration Research Centre general manager Vasantha Krishnan says.

"Recent trends show we are at a low point in the permanent and long-term migration cycle."

The department's predictions are broadly consistent with those of other economists.

Deutsche Bank's Darren Gibbs says there's an argument about timing and he expects the turnaround in net migration is more likely to happen next year.

"The pull factors out of Australia are still pretty strong and our economy's going to be pretty weak for most of this year."

Net migration of 6,000, assuming an average family size of three, means about 2,000 homes in the context of annual housing sales in a reasonable year of between 80,000 and 90,000, Gibbs says.

BNZ economist Doug Steel says an annual migration inflow of 6,000 is still quite low in the context of a recovering economy and the relatively low 6.6% unemployment rate.

"We suspect the labour market could become quite a key constraint on growth. It could start generating some underlying inflation and therefore a response from the Reserve Bank."

Thus although a turnaround may see migration go from being a headwind to a tailwind for the housing market, it may also lead to higher mortgage rates, he says.

Robin Clements at UBS New Zealand says although building consents have been trending higher, they're still not enough to cope with population growth.

"Most of the increase in housing approvals for December 2011 was concentrated in Auckland, Wellington and Canterbury, with many of the other regions showing small falls," said industry and labour statistics manager Louise Holmes-Oliver.

"However, in 2011, housing approvals were the lowest for a December year since this series began in 1965 - down 12% to 13,622."

ASB economist Jane Turner said the figures point to a weak construction outlook.

"Over the third quarter of 2011, we had started to see tentative signs of improving construction demand," she said.

"Weakness in consent issuance over the past two months suggests this momentum may be fading."

Compared to December 2010, December 2011 saw 1,127 new houses, including apartments, (up 13%), 979 new houses excluding apartments (up 7.7%) and 148 new apartments, including 41 rest home apartments, up from 85.

After removing seasonal distortions, new housing approval numbers rose 2.1% in December 2011. Excluding apartments, there was a small decrease of 0.2%.

Trend numbers for new housing approvals rose during the nine months to December 2011, but the rate of increase is easing.

"If there was any transgression into unlawfulness presented by the new law [the Real Estate Agents Act 2008], surely the lawyers should have raised some concern?"

"If three paid lawyers could not see the danger I was in, how could the average citizen be expected to see it? I know of no other criminal getting convicted with the help of three lawyers through the whole process."

However, Forster's concerns over the role of lawyers in the transaction were dismissed by REAA legal counsel Martin Sawyer.

He said any doubt around the quality of legal advice should be directed to the lawyers in question.

"The transaction undertaken was the focus of our inquiries," he said.

"The legislation and judgment are clear. If you are providing work or services, in trade, on behalf of another, to bring about a transaction then you are carrying out real estate agency work.

Forster also criticised the application of the Real Estate Agents Act in a case in which she said it was made clear to all parties that she was not a licensed agent.

"The complaint form stipulates that it is to be used only for agents who have held a license since November 17, 2009," she said.

"Nowhere in this Act does it mention the words property investor, property developer, property manager or property trader, the domain I am in"

Forster said that while she was pleased to have her conviction discharged, "the time involved and the expensive court costs paid for by the taxpayer and me have not got us any nearer to clarity for property traders about this new law."

"If that was the case then nothing would be sold and all prices would come down until they were affordable," said Realestate.co.nz chief executive Alistair Helm.

"That report is now in its eighth year and I calculated that in eight years half-a-million houses have been sold in New Zealand, yet all of them were completely unaffordable!"

Helm criticised what he described as the aim behind the report - lobbying for more land to be opened up for development.

"It's an overt and non-hidden vested interest, that' why it's the kind of report that comes out each year and the story doesn't change," he said.

He also criticised the methodology behind the report, drawing comparison between New Zealand and overseas locations.

He said the reports authors made no allowance for tax or interest rates or any equity that homebuyers may have.

Harcourts chief executive Hayden Duncan was equally scathing in his assessment.

"The real test will be if people are buying and selling homes, and they're doing so, in the last quarter more so than in the last three years," he said.

Real Estate Institute (REINZ) chief executive Helen O'Sullivan also questioned the reports methodology in comparing affordability among different countries.

"For $355,000, which was the median house price in New Zealand last month, you could buy a four-bedroom house in Richmond in Canterbury. I imagine if you went to New York you'd not be getting a house on a piece of land for their median house price."

Forster and her company Home Buyers were prosecuted for conducting real estate agency work with a license. Forster succeeded in having her conviction and fine discharged after Justice J Mallon described the $7,000 fine as out of proportion to the offence.

However, the $13,000 fine and conviction levied against Home Buyers was upheld and the Judge maintained that "the transaction as it proceeded was an offence."

Sawyer said the High Court decision should leave property finders in no doubt that they were acting unlawfully.

"It [the appeal] was successful in terms of sentencing, but in terms of lawfulness it was exactly the sort of decision we were looking for," he said.

"What you probably are going to see is more prosecutions and prosecutions that will probably help to even more clearly define boundaries."

Sawyer said the REAA was aware that many property finders work in conjunction with real estate agents and that these agents may also face legal proceedings.

"Certainly the Authority's view is that we will be targeting these people [agents] after this decision, we are now showing a very keen interest in the actions of these agents," he said.

"There are certainly some questions to be asked of the agents themselves, because they're meant to be providing a professional service, but what service is the consumer getting when someone else is able to come along and flick it on at quite a profit?"

Landlords spoke to Forster who had just returned to the country after a month overseas.

She said she wanted time to fully digest the ruling and would make a statement in the near future.

The claim relates to about 800 investors and focuses on the period to 2006 and beyond, when Blue Chip sold apartments off plans for developments in a number of locations in Auckland's CBD.

And the liquidators have said there could be further legal action as the process of unravelling the web of Blue Chip dealings continues.

Jeff Meltzer of Meltzer Mason Heath said, "It's taken some time to effectively analyse the considerable data underpinning a series of complex Blue Chip investor agreements and sub-agreements written during the relevant period.  Blue Chip had many variations of the agreements."

The liquidators allege there were a number of inherent flaws in the Blue Chip business model which caused the collapse of the Blue Chip group and losses to investors and creditors.

"These inherent flaws were compounded by the way the business model was operated," Meltzer said.

"Rather than purchasers' deposits being held in a solicitor's trust account they were instead paid to Blue Chip New Zealand Ltd and used by it for working capital.

"In addition, a 12.6% royalty fee on sales of apartments exceeded usual selling costs incurred by developers and was a possible contributing factor to the developments not being built.

"A Blue Chip undertaking to pay investors 9.3% interest on deposits, or a licence rental, cut into Blue Chip's cash resources which should have been available to pay construction and related costs on these developments."

The liquidators have been working on recovering money for investors through civil action, but Meltzer cautioned that filing the statement of claim was the first step in what could be a lengthy process.

New Zealand and Australia were also singled out in the report for a deterioration in affordability that is "unprecedented based upon the available historical data."

"Australia and New Zealand, for example, which had legendary housing affordability from after World War II to the 1980s and 1990s have seen house prices reach levels that are double to nearly triple their historic ratio to household incomes," the report said.

The survey examined seven countries - Australia, Canada, China  (Hong Kong), Ireland, New Zealand, United Kingdom and the United States -  using median house price divided by gross annual median household income to assess housing affordability.

New Zealand housing was rated "severely unaffordable" with a median multiple of 5.4, nearly three-quarters above the historic affordability norm of 3.0.

Auckland was the country's least affordable market with a median multiple of 6.4.

Across the seven countries surveyed, only nine large metropolitan markets were ranked as less affordable than Auckland (Hong Kong, Vancouver, Sydney, Melbourne, San Jose, San Francisco, Adelaide, London, London Suburbs).

Also ranked with Auckland among the severely unaffordable was Christchurch (6.3) followed by Tauranga/Western Bay of Plenty (5.9), Dunedin (5.2) and Wellington (5.1).

Palmerston North (4.1), Napier/Hastings/Hamilton (4.8) were ranked as seriously unaffordable.

"New Zealand had no affordable markets and no moderately unaffordable markets," the report said.

New Zealand is also uniquely singled out in the report for a warning about the role of its largest city - Auckland - and the country's economic performance.

Demographia highlights how Auckland's population gives the city a crucial role in the country's economy, and how its unique Super City governance structure may be hampering affordable housing efforts.

"The proclivity of planners. . . has been strongly in favour of more restrictive land use regulation," the report says.

"Because of its size relative to the nation and lack of competition from jurisdictions within reasonable commuting distance this is a particular risk for New Zealand."

All 13 economists surveyed by www.mortgagerates.co.nz expect no change on Thursday when Bollard reviews the official cash rate (OCR) which currently stands at a record low of 2.5% where it has remained since March in the wake of Christchurch's devastating earthquake.

Economists are currently evenly divided as to whether the first OCR hike will come in September or December. Craig Ebert at Bank of New Zealand, whose current pick is September, says the risk is it will remain unchanged into next year.

Ebert says while it's possible Bollard will move to neutral, he doesn't expect that will happen.

"He may give some ground in respect of some of the domestic issues," but the European situation now is no worse than when Bollard released his last monetary policy statement (MPS) in December.

Annette Beacher at TD Securities says last week's weaker than expected inflation data - the consumer price index fell 0.3% in the December quarter compared with market and Reserve Bank expectations of a 0.4% increase - will simply provide Bollard with additional comfort about holding rates.

Beacher has pencilled in a 50 basis point OCR rise to 3% for December this year "but risks of slippage into 2013 are high as unstable ground potentially delays the full-scale repairing and rebuilding of Christchurch."

Matt Nolan at Infometrics says there's even a very outside chance Bollard may cut the OCR - certainly the wholesale financial markets are attempting to price in a cut.

The strength of the New Zealand dollar - it is more than two US cents higher than when the MPS was released on December 8 - and the weak recent domestic data, including weak retail sales, could be used to justify a cut, Nolan says.