Economic confidence up but property sector optimism mixed, BNZ

Overall, confidence in the economy has reached a five-and-a-half year high, according to survey, with a net 57% of respondents expecting that the economy will be better in a year's time, well up from May's net 42% positive and the third consecutive month of improvement.

"In fact in the five-and-a-half years during which we have been running the survey sentiment has never been this high," said BNZ.

Survey respondents said Auckland rents have been rising all year but have slowed in May.

"Having achieved 5-10% increases in the last 12 months, I am waiting to see the effect of the removal of tax incentives to see if this means owners will exit the industry," said one respondent, who also expects rent rises to continue over the coming 12 months.

The Wellington market is described by one respondent as flat, though top end properties are letting easily.

The mid and lower range properties were seeing rents slide due to an under supply of tenants and over supply of vacant properties.

Christchurch was described by one respondent as "going through an unusual period of peaks and troughs."

"It is expected that the quake has affected things but the recovery is lumpy and as such we have had rises and falls in rental property availability (just coming off a high now). We need the EQC purse strings loosened to speed up the work to be done."

BNZ said the survey suggests it is reasonable for businesspeople in New Zealand to " plan (generally) for better times ahead."

However, the bank also sounded a note of caution.

"Soaring optimism is not a sufficient condition for strong growth. After all, the strong lift in early September 2008 came right before the global financial crisis, and last year's firm confidence up until June did not correlate with the fact that during that quarter the economy almost shrank."