Rents at two-and-a-half year high, but OCR set to rise

The report also noted building approvals strengthened in May and house sales sustained this resurgence in June. The days to sell also improved in June to its lowest level in 13 months despite weak immigration as, "the market is slowly building momentum."

The ANZ Property Focus includes the ANZ Property Gauges, 10 gauges the bank uses to assess the state of the property market and look for emerging trends.

Of the 10 gauges, two point to house price rises, three indicate either rises or no movement, four suggest falls and one is neutral.

Both median rent - at a two-and-a-half year high and predicted to rise further - and interest rates point to price rises.

Supply-demand balance, consents and house sales and housing supply all point to either rises or no change, with time to clear market at an 18 month low and sales picking up.

Migration - with fewer immigrants and more emigrants, affordability, liquidity and serviceability/indebtedness all point to price falls as affordability has shown little improvement over the past six months and households continue to repay debt.

Globalisation, relative property price movements between New Zealand, the US, UK and Australia, remains neutral.

ANZ also said mortgage rates had not changes for three consecutive months and that the last time they remained static for this length of time was in 1992.

"But this record is on borrowed time. Given the inflationary pressures building, it is only a matter of time until the Reserve Bank says enough is enough and reverses the emergency cut that they made to the Official Cash Rate."