Expectations that house prices will rise have jumped, especially in Auckland, ASB's quarterly survey of housing market sentiment has found.
Nationwide, 44 per cent of respondents expect higher prices, up from 33 per cent last quarter, while 19 per cent expect them to fall, down from 25 per cent last quarter. The net balance of 25 per cent expecting prices to rise is up from 11 per cent in the previous survey.
The increase is especially strong in Auckland, a net 42 per cent expecting prices to rise, up from 20 per cent last time.
Expectations that interest rates will rise have also climbed, to a net 46 per cent from 34 per cent last time. Last month, the Reserve Bank signalled it intended to start raising the official cash rate as soon as next month, but since then turmoil in international financial markets has seen economists' expectations that it will go ahead recede.
The survey found an easing in overall confidence: a net 25 per cent consider it a good time to buy a house, down from a net 27 per cent in the previous survey.
The ASB survey is a tale of two cities.
"The Auckland housing market remains tighter relative to other regions," ASB chief economist Nick Tuffley said. "This is reflected across a range of measures, including the relatively shorter average number of days to sell and the low number of houses on the market. Auckland is already becoming a sellers' market."
But in Christchurch, overall confidence is weaker than it was three months ago, with a net 6 per cent of respondents considering it a bad time to buy a house.
"Outside Canterbury the picture remains one of a very gradual pick-up in underlying housing market activity," Tuffley said. "We expect house prices nationwide will increase at a modest annual rate of 3 per cent heading into 2012."
The number of building consents being issued remains low.
"This raises the risk of an undersupply of housing over coming years," Tuffley said. "This is likely to support prices."
