KEY POINTS:
Confidence in the housing market is at its lowest ebb since ASB began surveying it 12 years ago.
Whereas three months ago respondents were about evenly split on whether house prices would rise or fall, in the latest quarterly survey a net 34 per cent expect them to fall.
"It's a fair way below any of the recent troughs and the lowest since the survey started in 1996," ASB chief economist Nick Tuffley said.
"My own expectation is that the market will indeed look weaker than at any time in that period, so it's not surprising."
There is also a deterioration in the net balance of respondents who consider it a good time to buy.
In the previous survey respondents were evenly split on this question too. Now a net 9 per cent consider it a bad time to buy.
That may reflect a rise in the proportion of respondents who believe interest rates have further to rise - from a net 46 per cent last time to a net 54 per cent.
Mr Tuffley said the wider influences on the market, like migration, incomes and interest rates, suggested the market could repeat the experience of 1998 to 2001, when the average house price trend was flat for several years.
Aucklanders were slightly more optimistic that the rest of the country, with as many saying it was a good time to buy as a bad time.
That might be just a statistical quirk - these are responses from 200 people representing about 1 million Aucklanders - but it might reflect a fundamental shortage of housing in Auckland, Mr Tuffley said.
The survey was consistent with other data on the state of the housing market, he said.
Turnover has been sliding for a year and is back where it was in 2001.
The number of dwellings for sale has risen and the time between listing a property and selling it keeps on getting longer.
And while national median price is steady, so far this year it has been consistently below levels between August and November last year.
It is, in short, a buyers' market but not enough of one to suggest a surge in demand is imminent, Mr Tuffley said.
The net gain of people from migration, which helped fuel demand for housing earlier in the decade, has dwindled to a below-average flow.
"The level of immigration, at just over 1 per cent of the population, is high and it is unlikely it is about to rise," Mr Tuffley said.
But emigration, largely to Australia, was also likely to remain near current levels, with its stronger growth outlook in the short terms on top of the existing gap in incomes.
Prospects were growing that the Reserve Bank would be able to lower the official cash rate in the second half of this year, possibly by the end of September, Mr Tuffley said.
MARKET WORRIES
* Expectations house prices will fall are the highest in 12 years.
* Fears that interest rates have further to rise are up.
* Conclusion: It's a bad time to buy.
