More Kiwis think it's a good time to buy a house than at any other point in the past six-and-a-half years, ASB's latest Housing Confidence Survey shows.
The bank's chief economist Nick Tuffley says it's a combination of interest rates going down, the capital gains tax being canned, wages going up and house prices stalling.
"These results are not all that surprising given the strong link we observe between rates of house price inflation and perceptions of whether it's a good time to buy," he said.
"According to the latest REINZ data, national house prices have basically flat-lined since the start of the year, and the Auckland and Canterbury housing markets have been underperforming the national average. Flat or falling house prices alongside solid income growth has seen affordability improve a little.
"We'll be watching with interest to see if buyers act on their intentions."
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A net 9 percent believe it's a good time to buy and a net 20 percent expect prices to go up over the next 12 months, up from 11 percent in April.
"The mild lift in house price expectations is consistent with some of the other housing indicators we monitor that are suggesting the housing market may be slowly turning a corner," said Tuffley.
"Debt servicing costs have come down quite substantially, so that's making it much, much easier for first-home buyers to get into the market and make those mortgage payments look a lot more affordable."
Bagrie Economics founder Cameron Bagrie told The AM Show on Monday the results aren't surprising, and the confidence the boost the economy would get from rising house prices would help us offset a potential recession, with the way the global economy is going.
"The indicators are encouraging - we're starting to see a little bit of a lift. Emphasis on 'a little bit'.
"The latest REINZ data was a little bit encouraging as well - we're starting to see house sales pick up. House sales normally lead to an improvement, a fall in days to sell, which normally leads to house prices moving up."
Tuffley is predicting a nationwide 6 percent boost in prices, but Bagrie's warning homeowners to curb their expectations of a windfall if they choose to sell.
"The million-dollar question is, how far do we expect house prices to move up? People are out there throwing around some 6-7 percent numbers in the next 12 months. I'm not convinced we'll see that sort of lift. We'll see a mild lift... that will help with wealth, help a little bit with the feelgood factor - we'll take it.
"But I think there's bigger economic issues here than trying to restimulate growth via the property market."
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- The New Zealand suburbs profiting home owners the most
- Auckland sees biggest property price drop in five years
Cantabrians appear to be the most optimistic, with a net 18 percent believing now is a good time to buy. Aucklanders are at the other end of the spectrum, despite prices being 5 percent below what they were last year.
"The Auckland market has been at the decidedly cool end of the spectrum as a raft of Government and Reserve Bank policy measures have seen investors and offshore buyers abruptly pull back from the market," said Tuffley. "Turnover has been glacial."
Both respondents to the survey and Tuffley are predicting further cuts to the official cash rate, already at a record-low 1 percent.
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