Confidence in the housing market has weakened as people await details of expected tax changes in the Budget on May 20 and the start to a series of interest rate rises from the Reserve Bank.
ASB's quarterly survey of sentiment in the housing market has recorded a marked drop in
the proportion of people expecting house prices to rise over the next 12 months, to a net 35 per cent from 51 per cent three months ago.
Likewise, fewer see it as a good time to buy a house - a net 29 per cent, down from 33 per cent in the previous survey.
Expectations that interest rates will rise were almost unchanged at a net 59 per cent.
ASB said the survey results were in line with recent data showing a slowdown in activity in the market, largely driven by continued uncertainty about the potential for tax advantages for property investment to be removed in the Budget.
The median number of days it takes to sell a property has been edging up since the spring and is now around the long-run average.
Although the number of fresh listings remains relatively low, the supply looks ample relative to the modest demand, ASB said.
"It appears the balance is now tipped slightly in favour of buyers."
Even so, house prices remain resilient for now, the bank said.
One measure of house prices - the REINZ stratified index - is up 6.8 per cent on a year ago.
Looking forward, ASB expects the Budget changes to reduce demand for investment properties and therefore lower activity in the housing market.
"Beyond the ups and downs of 2010 we expect weak house price growth. A positive for house prices is continued population growth at a time when new construction has not kept pace," it said.
"However, prices do remain quite high compared with incomes and rents."
And the tax changes were likely to require higher gross rental yields in the future to make the sums add up, ASB said.
