House price expectations hit 5-and-a-half year low

ASB expects a further drop in confidence next quarter. Photo/File

Aucklanders are no longer expecting house prices to lift, with expectations at a 5-and-a-half year low.

The ASB Housing Confidence Survey for the last three months showed Aucklanders led the disillusionment with only 15 per cent of respondent's saying they expected house prices to rise.

It's the lowest price expectation among Aucklanders in eight years.

The rest of the country was slightly more optimistic with 32 per cent believing prices will rise, but that is down from 42 per cent last quarter and ASB expects a greater drop in confidence next quarter.

ASB chief economist Nick Tuffley said the dip in confidence reflects the fact house sales volumes are among the lowest levels since 2014.

"The subdued sales activity has coincided with the market hitting the brakes on house-price growth, with prices falling slightly in Auckland and Christchurch," Tuffley said.

"In the case of Auckland, this is the first time house prices have fallen since 2010."

"It makes sense that when people are hearing the market is softening they adjust their expectation accordingly," he said.

Tuffley said the slowdown is partly caused by LVRs and interest rate hikes.

"We certainly think the second round of LVRs has kicked things up a gear," he said, "the 50 per cent investor threshold is making it much harder for some people to buy."

"Given that market conditions are likely to remain soft over the next few quarters, we anticipate a greater drop in house price expectations in next quarter's survey," Tuffley says.

"But when we step back and take a look at the big picture, it's still one of very strong demand and limited supply. Ultimately that means upward pressure on prices will continue, just not to the same degree we've seen."

MostNew Zealanders felt it was a bad time to buy a house, although they viewed the market less negatively than they did in the previous quarter.