Expectations of rising house prices have hit a record high in ASB's quarterly survey of housing market confidence, a net 65 per cent of respondents expecting them to rise over the next year.
In Auckland the figure is a net 71 per cent, also a record in the survey's 19-year history.
"The Auckland housing market remains very supply constrained at a time when demand is very high," said ASB chief economist Nick Tuffley.
"However, expectations of higher Auckland prices did ease off towards the end of the quarter. We may be seeing the first signs of respondents taking into account the likely impacts of the new housing restrictions, coming into effect on October 1."
In the rest of the North Island expectations of higher prices also climbed, to a net 63 per cent from a net 54 per cent the previous quarter.
That probably reflected the prospect of the Reserve Bank easing loan-to-value ratio restrictions outside Auckland, as well as falling interest rates, Tuffley said.
Views of the outlook for interest rates have flipped from a net 11 per cent in the previous survey expecting them to rise in the year ahead to a net 3 per cent expecting a fall.
ASB expects the Reserve Bank to cut the official cash rate by another half a percentage point by year's end.
A net 11 per cent of respondents, including a net 27 per cent of Aucklanders, consider it a bad time to buy a house, compared with a net 8 per cent and a net 19 per cent respectively in the April quarter survey.
"Our outlook for the housing market is very much in line with the survey results, with continuing upward pressure on house prices and downward pressure on interest rates," Tuffley said. "Outside Auckland, relaxed LVR restrictions will give additional support on top of the cheaper lending rates."
But while he expects Auckland prices to keep rising, the pace is likely to slow as immigration eases, building increases, restrictions on investors offset - albeit slightly - lower interest rates and affordability constraints like the city's high house-price-to-income ratio bite harder.
65% expect house prices to rise. (All values net)
11% consider it a bad time to buy a house.
3% expect interest rates to fall.