The REINZ report signalled that house values picked up in March, but according to JPMorgan's Helen Kevans, "we suspect there is limited upside to house prices in the very near term."
Kevans said that while the report found house prices and sales volumes rose over March, and days to sell fell, the weakness in the domestic economy means, "we find it difficult to see that the market can sustain the recent improvement, especially as households continue to shy away from taking on additional debt."
"Indeed, the clearest indication of continued caution among buyers is the large number of days it is taking to sell a house. It took 41 days to sell a house in March, compared to 35 days a year earlier, but a much higher 58 days in February. And although house prices posted a modest rise (0.5% month-on-month), they remain 5.1% below the November 2007 peak," she said.
However, Kevans did say the recent falls in mortgage rates may spur buyer demand.
Westpac said that the REINZ figures, allied with a recent Barfoot & Thompson report, suggest that while there has been a rise in housing market turnover, "the nationwide numbers suggest the surge is actually concentrated in Auckland."
The bank also said the sales data needed to be viewed in light of the depressed base.
"House prices have been pretty flat since September last year. Today's data is, broadly, a continuation of that trend," the bank said.
ASB economist Chris Tennent-Brown also noted Auckland was the driver for much of the activity.
"The lift in nationwide turnover was driven by a strong pick-up in Auckland. Auckland turnover picked up 53% from February, and the region's turnover accounted for unusually high 42% of nationwide activity. Auckland also recorded the shortest number of days to sell," he said.