The majority of property investors expect house prices to fall or grow very slightly over the next year, and so are pinning their hopes on higher rents, the ANZ bank says.
ANZ's annual survey of residential property investors showed 70 per cent expected house prices to either decline or rise only slightly, compared to 24 per cent who thought that way last year.
A third of residential property investors expected house prices to fall over in the coming year, and another third expected them to have flat to 2.5 per cent growth.
ANZ chief economist Cameron Bagrie said property investors were becoming more circumspect but continued to expect strong returns from housing in the medium-term.
Although house sales figures for March halved nationally , about 69 per cent of those surveyed expect house price growth between 2.5 and 10 per cent over the next five years, broadly the same as last year.
"The majority of investors expect weakness in the market to be a reasonably short-lived affair, which appears at odds with the historical pattern of house prices remaining flat for four years following an upswing," Mr Bagrie said.
However, he expected prices to flatten out for a number of years, adding that the recent easing should be no surprise after six years of strong growth.
Landlords were expecting solid rental increases, with 68 per cent expecting rents to increase by anything from 2.5 to 10 per cent over the next year.
Nearly three quarters are expecting rents to grow at that pace over the next five years.
Because capital growth was looking more limited in the short-term, investors were "naturally" turning their attention towards the yield on the investment, Mr Bagrie said.
"Unlike previous housing cycles there does not look to be an excess supply of houses so rents are likely to be biased up.
"However, this is likely to be countered by flat net migration, and a slowing economy."