"Demand for housing has lifted modestly over the past year, reflecting a return of first-home buyers as the labour market stabilises, as well as increased interest from investors," he said.
"However, supply of new housing has not yet picked up in response to stronger demand. The market remains supply constrained due to low levels of housing construction. Supply shortages have been most acute in Christchurch and Auckland. As a result, price increases are strongest in these areas."
In Auckland the population pressure remained pretty steady and in Canterbury there are people displaced and looking for homes.
"But it still feels like much of the dynamic is that the supply side is tight."
Barfoot and Thompson's listings were still lower than at any time during the last boom, Tuffley said.
Interest rate expectations remained fairly low, he said. A net 24 per cent of survey respondents expect them to increase, down from a net 27 per cent three months ago.
This was in line with ASB's own view that the Reserve Bank was likely to hold off raising the official cash rate until March next year.
"However, while we expect floating rates to remain unchanged, fixed mortgage rates are likely to increase over the coming year as the [money] market shifts away from pricing in a cash rate cut to pricing in cash rate increases."
Meanwhile, a Bank of New Zealand survey of real estate agents asked if they were noticing more or fewer foreign buyers in the market and where they appeared to come from, BNZ chief economist Tony Alexander said.
"The top country is the United Kingdom with 27 per cent of agents noting this, followed by China at 24 per cent, then Australia 22 per cent. In Auckland, however, Chinese buyers are seen as prevalent among foreigners by 45 per cent of agents responding."
