Housing confidence has softened this quarter as interest rate expectations have shifted sharply higher, with most households now expecting rates to rise.
House price expectations have eased but remain positive, with more people now expecting prices to stay flat rather than fall.
Buying sentiment eased only slightly, supported by plentiful housing supply despite rising living costs and softer confidence.
Confidence in New Zealand’s housing market has eased this quarter, as higher interest rate expectations and global uncertainty weigh on house price sentiment, even as buying conditions remain relatively positive.
In ASB’s latest Housing Confidence Survey, house price expectations fell in the three months to April, with a net 19% of respondents expecting prices to rise over the next 12 months, down from net 30% in the previous survey.
Buying sentiment also eased slightly to a net 20%, though it remains relatively strong compared to recent years.
What’s driving the shift?
ASB Senior Economist Kim Mundy says global developments, particularly the fuel crisis linked to conflict in the Middle East, has shifted the outlook for inflation and interest rates.
“House price expectations have eased as rising fuel costs and inflation concerns flow through to higher interest rate expectations,” Kim says.
This shift in interest rate expectations is flowing through to broader housing sentiment, weighing on house price expectations while elevated housing supply continues to support buying conditions.
“There has been a sharp turnaround in interest rate expectations, with most households now believing mortgage rates have already bottomed and more expecting rates to rise over the coming year.”
Over the three months to April, a net 48% of respondents now expect interest rates to increase over the next 12 months, marking a significant shift compared to one year ago where net 48% of respondents were expecting interest rates to fall.
What it means for the housing market
Most respondents still expect stability rather than a downturn, with many expecting house prices to remain flat over the coming year.
Regional differences remain evident, with Auckland recording the largest fall in house price expectations, suggesting Auckland may be more sensitive to higher mortgage rates or fuel costs.
By contrast, Canterbury has remained relatively resilient, with house price expectations holding up and market conditions tightening, though respondents now perceive it is a less favourable time to buy in the region.
Kim says housing supply continues to play an important role in supporting buying sentiment.
“While higher interest rates and the rising cost of living pressures are expected to weigh on demand, abundant housing supply is continuing to support buyer interest, giving purchasers more choice, flexibility and time to make decisions.”
What’s next?
Expectations of higher inflation and interest rates are likely to dampen/ weigh on housing demand in the near term, particularly as cost‑of‑living pressures persist.
ASB Economists expect inflation to lift above 4% in 2026, with interest rates also likely to rise over the second half of this year.
“With interest rates likely to rise from here, we expect to see households willing to lock in mortgage rates and for housing market activity to remain relatively subdued in the near term,” Kim says.
The latest ASB Housing Confidence Survey, along with other recent ASB reports covering a range of commentary, can be accessed at the ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html
Note: net percent is calculated as the percentage of “yes” or “up responses minus the percentage of “no” or “down responses. The ASB Housing Confidence Survey has been conducted quarterly since July 1996. Respondents are asked about their expectations for house prices and interest rates over the next 12 months, and whether it is a good time to buy a property.