ANZ's economists believe there may be a rush of new property listings in the next four months, as vendors and investors try to beat the October 1 introduction of new tax and mortgage lending rules on residential property investments.
In a research report, ANZ said although uncertainty surrounded the precise impact of the proposed changes, it suspected it could be significant.
"The initiatives don't apply until 1 October and that may distort behaviours in the meantime," the report said.
"We suspect the impact could be stark given the extent of house price movement of late.
"We believe sentiment could turn on a dime.
"We will be paying particularly close attention to the number of property listings over the coming months, which could rise sharply as sellers try to beat the 1 October introduction of the new measures.
"Some sellers may rush to get out while the going is good.
"Some would-be investors may also try to skirt the borrowing restrictions by getting in now, but on the banks' part we expect to see behavioural shifts straight away.
"The RBNZ has already made it clear that it expects banks to work within the spirit of the changes immediately and we are sure it will be monitoring bank behaviour closely.
"On net then, it seems likely the changes could tilt the balance in favour of supply over coming months, further reinforcing the impact on sentiment and house price expectations.
"We may see a rather sudden rebalancing of supply and demand if sellers race beat the 1 October deadline for the introduction of the new measures.
"Ultimately, we suspect this marks a turning point for the Auckland housing market."
ASB also sees rush of activity
ASB also believes the changes could result in a rush of property investment activity over the next few months.
"As a result of the consultation period there may be unintended consequences, which could further boost demand in the Auckland property market in the short term," ASB senior economist Jane Turner said in a QuickView report on new tax rules.
"It's possible that property investors could rush in ahead of October 1 to avoid being subject to the new rules."
"However, the RBNZ's new LVR lending limits on investment property (expected to be honoured by banks immediately) could potentially dampen this impact," said Turner.
Meanwhile, the ANZ report said the Auckland housing market was already primed to soften.
"Prices have risen by a third in two years.
"That's a pretty stretched base to keep accelerating off, especially with major sources of buyer demand now being targeted.
"At the very least sentiment will be negatively affected and sentiment is a crucial element of any asset market, the ANZ report said.
It also warned that any change in the property market would be occurring at the same that the country was facing other economic challenges.
"Importantly, this shift in housing market performance will be occurring when other challenges such as dairying are intensifying and inflation is low.
"The risk profile facing the economic outlook continues to shift.
"As such, the new measures reinforce our view that the OCR is heading lower, and sooner as opposed to later.
"We retain our expectation that the RBNZ will cut in both June and July.
"We also retain a bearish slant towards the New Zealand dollar."
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