House price expectations sink to a three-year low as rates keep climbing, ASB finds
New Zealanders' expectations for house price growth have fallen to their weakest level in three years, even as buyer sentiment holds steady, according to ASB's latest Housing Confidence Survey.
Net 9% of respondents expect prices to rise over the coming year, down sharply from a summer peak of net 30% in January — the lowest reading since July 2023.
That souring sentiment lines up with actual price data — Cotality's Home Value Index recorded a fifth consecutive monthly decline in August, with the national median down 0.36% for the month.
Price optimism fades, but conditions stay balanced
ASB senior economist Jane Turner said the pullback reflects a housing market still finding its footing rather than a sharp downturn.
"Although net house price expectations are down, they remain close to average levels and are consistent with relatively balanced housing market conditions – with house prices largely trending sideways," Turner said.
The survey also picked up rising uncertainty, with 15% of respondents unsure which way prices are headed — the highest share since 2019.
ASB said it "cannot rule out a small fall in house prices over the coming months but expect house prices to firm from 2027."
Rate expectations climb as RBNZ tightens
Interest rate expectations lifted for a second straight quarter, with net 57% of respondents now expecting borrowing costs to rise over the next year, up from net 48% in April.
ASB noted "there is minimal doubt over the direction of interest rates," with 62% expecting higher rates within 12 months and just 5% expecting a fall. The bank expects the Reserve Bank to keep tightening, forecasting the OCR will reach 3.25% by year-end.
Fixed mortgage rates have already been climbing, with the average two-year rate up 41 basis points since January, though ASB flagged "risks are skewed to a more gradual pace – with the potential for the RBNZ opting to pause at some point" if domestic demand stays soft.
That forecast now looks closer to reality — the RBNZ delivered a further 25-basis-point hike to 2.75% on 2 September, with bank economists split on whether the next move lands in October or December.
Buyers still calling the shots
Despite rising rates, buying sentiment held firm, with net 20% of respondents saying now is a good time to buy — unchanged on the previous quarter and consistently positive since late 2024.
Housing demand has nonetheless eased, with sales falling to a two-year low in July, while inventory has edged higher as new listings pull back.
ASB expects the market to remain skewed in buyers' favour through the rest of 2026, with a recovery not expected to take hold until population growth and labour market conditions improve into 2027.
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