Housing market sentiment continued to soften in the three months to January, according to ASB Bank's quarterly survey.

A net 20 per cent of respondents consider it a good, rather than bad, time to buy, down from a net 24 per cent in the previous quarter.

In Auckland, it was a net 18 per cent down from a net 23 per cent in the previous survey.

Expectations house prices will rise have firmed to a net 27 per cent nationwide, from a net 22 per cent last time. In Auckland, the increase was from a net 36 per cent to a net 40 per cent.


But, like the financial markets and most economists, respondents see less upward pressure on interest rates.

A net 44 per cent expect them to rise, down from a net 57 per cent three months earlier.

In Auckland, the decline was similar, from a net 54 per cent to a net 41 per cent.

ASB chief economist Nick Tuffley says it is a sellers' market.

"You have a moderate number of people who are interested in buying and just slightly fewer interested in selling."

The number of new listings each month was subdued, especially in Auckland, he said.

The supply side was also affected by a low level of new construction.

"The housing market is one where if people don't really want to sell they generally don't bother trying."

The surge in mortgagee sales was largely behind us, he said.

And floating mortgage rates are at their lowest since the mid-1960s which helps attract borrowers.

"If your circumstances haven't changed and you were able to service a 9 per cent mortgage a few years ago, you will certainly be able to service one several percentage points lower than that."

Real Estate Institute figures showed the number of house sales in December was up 21 per cent on the same month the previous year, but still around 30 per cent lower than in the five years before the global financial crisis.

"The level of turnover is well below average and has been pretty much since the GFC hit," Tuffley said.

"I don't envisage we will see over the next year or two turnover exceeding those levels," he said.

"It will creep up but not dramatically.

"And it will remain a market that looks quite different to those boom times."

The general tightening in the housing market showed signs of feeding through into a recovery in house prices, he said.

The stratified measure of house prices - which adjusts for distortions which arise if an usually large number of high or low-end properties are sold in any given period - is now 3.1 per cent higher than a year ago and 7.6 per cent higher in Auckland.

Broadly speaking, Auckland has been leading the economic recovery.

ASB's regional scoreboard - which compares regions on a range of indicators including growth in population, employment, wages, retail sales, construction and housing market activity and prices - has had Auckland outperforming the rest of the country for some time.

"We expect nationwide house prices will increase at a modest annual rate of just over 3 per cent over 2102," Tuffley said.

"House price growth in Auckland is likely to be stronger than that, re-flecting its relatively tighter market."