Price expectations up, confidence down

"House price expectations remain highest in Auckland, consistent with recent data showing a tighter supply of housing in this region compared to the rest of the country," said ASB chief economist Nick Tuffley.

"Despite the boost in price expectations across New Zealand, however, housing confidence still dropped slightly, reflecting a continued caution in the market."

The ASB Housing Confidence Index edged down two points over the quarter, with a net 25% of respondents saying now was a good time to buy a house compared to 27% in the previous quarter.

On house price expectations the survey found 44% expect to see prices rise, compared to 35% in the last quarter.

The survey also found an increase in those expecting higher interest rates, up from 46% in the previous quarter to 54%.

"Signs the economy has been improving have no doubt contributed to household expectations that the Reserve Bank would raise the OCR earlier. However, there has been significant volatility in global markets since the survey was taken, which adds some uncertainty as to when interest rates will rise," said Tuffley.

Given the nature of the Auckland market, Tuffley said he believed the region would see the strongest price growth over the coming year, with more modest gains nationwide.

"We expect house prices nationwide to grow modestly at a rate of around 3% over the coming year. House price growth in Auckland is likely to be stronger that that, reflecting its relatively tighter market," he said.