House prices tipped to keep rising: survey

A net 56 per cent of people surveyed expect house prices to rise, close to the 2013 peak of 63 per cent. Photo / NZME.

Expectations of rising house prices remain close to historic highs in ASB's quarterly survey of housing market sentiment.

While 62 per cent of respondents expect prices to rise over the next 12 months, only 6 per cent expect a fall. The net 56 per cent expecting a rise is down from a net 59 per cent in the previous quarter but still close to the 2013 peak of 63 per cent.

In Auckland, a net 63 per cent expect prices to rise, against 68 per cent last time. The Real Estate Institute's Auckland house price index rose 16.7 per cent in the 12 months to March.

Despite increasingly clear signals from the Reserve Bank that the next move in interest rates is more likely to be downward, a net 11 per cent of respondents expect interest rates to rise over the next 12 months, although that is a shift from a net 34 per cent three months ago.

"We are surprised there haven't been significantly more people expecting interest rates to decrease over the year ahead, given mortgage rates have actually been declining this year," said ASB chief economist Nick Tuffley.

"The Auckland market is by far the most stretched region from an affordability perspective, and, unfortunately, we don't think this is likely to change any time soon," Tuffley said.

The median house price in Auckland is 8.7 times the median household income before tax. That compares with a multiple of seven times before the global financial crisis and a national average now of six times.

"For the coming months, the combination of strong migration inflows, low interest rates and the confidence shown by respondents in the survey is supportive of robust demand and price gains," Tuffley said.