Photo: RNZ / Marika Khabazi
There are signs house prices may be close to bottoming out as sales picked up last month.
ANZ economists have revised up their forecast for houses prices, to a fall of 18 percent from the November 2021 peak.
The bank previously forecast prices to fall 22 percent from the peak.
It said with prices already down around 16 percent, it meant there was only about 2 percent to go, with prices expecting to bottom out in June.
Housing market data came in stronger than expected last month, with sales picking up 0.7 percent from February.
The bank said some fixed mortgage rates have also fallen, and earlier this week, the Reserve Bank loosened loan-to-value restrictions.
"Mortgage rates have all changed a little over the past month, with the moves seen (on average across the big banks) exacerbating the inversion of the mortgage curve out to three years," it said.
"As a consequence, it is now progressively cheaper to fix the longer one chooses to do so, all the way out to three years."
Net migration has also picked up strongly to pre-Covid levels.
"Net migration has been surprising to the upside - to the point that this is threatening to create a renewed housing deficit," ANZ said.
Migration and stabilising interest rates went a "long way" in explaining the stronger than expected housing data, it said.
ANZ forecast the Reserve Bank to deliver one more rate hike next month, followed by a pause, and then rate cuts late next year.