Too soon to draw conclusions: Alexander

He said house prices would continue to rise as the imbalance between demand and supply at current prices showed no sign of letting up.

He also expected the gains to spread outside Auckland and Christchurch.

“We are not sure how long-lasting the depressing effects of the October 1 rule changes for low-deposit buying will be. We have a suspicion that a shock factor has artificially depressed market activity and many buyers will return to the market this year.”

He said no data was available to predict when that might happen, or to what intensity. The 80,000-odd houses changing hands a year was not high by historic standards, he said, and more activity growth was likely.

It was too early to say whether price rises had plateaued, he said.

Floating mortgage interest rates would also rise from March, Alexander said

He pointed out that many fixed rates had already increased.He said borrowers should be prepared to rates to move quite a bit over the coming year.

“Given the way in which we think the labour market could rapidly tighten up and threaten inflation the greater risk is of rapid rather than slow rate rises."