According to the ASB Housing Confidence Survey we are back to January 2013 house-buying confidence levels with Auckland values having softened slightly.
The bank's chief economist Nick Tuffley says: "Price [rise] expectations have fallen to an eight-year low in Auckland as we continue to see the Reserve Bank of New Zealand's speed limits taking effect."
The survey shows that national house price rise expectations are trending downwards, but reveals a difference in sentiment between North and South Island respondents.
Tuffley says price rise expectations in the South Island have risen, led by Canterbury (net 11 per cent from 8 per cent previously) while the North Island is dropping; indicating a lag as the South plays catch-up to Auckland's three-year price boom, which petered out last year.
The survey shows annual price growth rates have slowed sharply in North Island centres such as Auckland, Tauranga and Hamilton. In contrast, price growth rates remain around 10 per cent a year in the South Island beyond Canterbury.
Tuffley says despite the lift in overall sentiment to buying property, upcoming housing policy changes may push prices down further.
He says: "There is a degree of uncertainty around the potential impact of policy changes so investors and home owners are likely to remain cautious and not rush into any major decisions.
"The market will continue to be constrained by population growth and low housing supply for some time."
Most respondents to the ASB survey expect interest rates to rise over the next 12 months but with less conviction than in previous surveys.
Tuffley says muted inflation pressures have pushed out the bank's forecast for Reserve Bank of New Zealand rate hikes.
"We now expect the RBNZ to start lifting the official cash rate in August 2019, though in the meantime offshore interest rate increases could see mortgage rates start to creep up."