Residential rents are rising, mortgage interest rates are sinking and house prices have just been forecast to rise more steeply this year than originally expected.

Dominick Stephens, Westpac chief economist, today also revised his national house price forecast from up 7 per cent this year to up 10 per cent.

"The market has proved slightly stronger than we anticipated. We now expect the current upturn to culminate at a rate of 10 per cent annual house price inflation in the middle of the year," he wrote in the latest NZ Home Truths.

Activity in the past year showed how financial factors can trump physical supply and demand in the housing market, Stephens said.

"New Zealand construction activity has ramped up substantially while net migration has steadily declined. However, house prices have still shot higher. We think that has been due to a big reduction in interest rates combined with the cancellation of earlier plans to introduce a capital gains," he wrote.

In related news, StatsNZ and Westpac released new information today showing how rapidly the New Zealand housing market was changing.

Rents rose by up by 10.5 per cent in the year to June 2019, StatsNZ said, from $110.80/week to $122.50/week. Mortgage interest payments fell 9.6 per cent from $88.50/week to $80/week.

Nearly a third of households spent 30 per cent or more of their total household income on housing costs. Renters were about twice as likely than homeowners to spend 40 per cent or more of their household income on housing costs.

Just over one in four or 27.9 per cent of renting households spent 40 per cent or more of their household income on rent and other housing costs in the June 2019 year.

In contrast, about one in eight or 12.6 per cent people who owned, or partly owned, their own home spent 40 per cent or more of their household income on housing costs.

Today, the Real Estate Institute released its new data. That showed the house price index, which measures the changing value of property in the market, rose 7 per cent in the year to January to a record high of 2922.

The volume of sales in Auckland rose 9.7 per cent on last year, while the rest of the country ticked up slightly by 0.9 per cent.

"Normally January is a quiet time of the year, and for a few regions that was definitely the case, however, overall the country had a strong start to the year with the most residential properties sold for the month of January in four years," REINZ chief executive Bindi Norwell said.

She told Heather du Plessis-Allan that there are factors such as business confidence, low unemployment and record low interest rates, as well as limited new listings that is putting pressure on the market. 

TradeMe data out today showed tenants started this year with "record-breaking rents after the national median rent rose 4 per cent to a new high of $515/week. The summer rental rush was in full swing in January and every region saw an annual increase in rent. The number of enquiries rose 86 per cent on December. Wellington is still the most expensive region to rent with the median weekly rent rising $25 on last January to $575 per week."

OneRoof editor Owen Vaughan said the recent lift in prices would give cheer to homeowners after three years of little to no growth.

"Anecdotal evidence from open homes and auction rooms show a real demand for properties from first home buyers and investors but unlike previous price lifts this is being driven by limited stock," he said.

"FOMO fever is back and it's the fear that Aucklanders are missing out, not because of sky-high prices or sky-high interest rates, but because options are limited."