The delta outbreak in New Zealand seems to have forced a last-minute change on the Reserve Bank, which yesterday held the OCR at 0.25 per cent, despite a pre-outbreak consensus amongst bank economists that it would hike the rate.

With the country going into a surprise strict lockdown the night before the announcement was due, the RBNZ said it was “alert to the supply disruptions that COVID-19 can create, and the dampening effect this can have on confidence”.

"The Committee agreed that their least regrets policy stance is to further reduce the level of monetary stimulus so as to anchor inflation expectations and continue to contribute to maximum sustainable employment.

“They agreed, however, to keep the OCR unchanged at this meeting given the heightened uncertainty with the country in a lockdown."

The existing Funding for Lending programme conditions remain in place.

After months of soaring house prices, the central bank now says current property prices are not sustainable and has switched to predicting an outright drop in prices, rather than just a flattening.

It is now forecasting that house prices will fall from the final quarter of next year, continuing in every quarter through to the third quarter of 2024.

It is basing this forecast on “a number of factor [that] include strong house building, slower population growth, changes to tax settings, and the ongoing impacts of tighter bank lending rules”.

“Rising mortgage interest rates, as monetary stimulus is reduced, would also constrain house prices to a more sustainable level,” the RBNZ said.

But the RBNZ still expects a further 5.2 per cent jump in house prices in the current quarter, before any correction kicks in.