Cost of living: Kiwis think housing downturn 'done and dusted' but ASB warns prices won't shoot up

Major bank ASB is warning house prices aren't going to shoot up in the near term despite many Kiwis believing the downturn is "done and dusted".   

ASB released its Housing Confidence Survey on Thursday morning, which found price expectations are at their highest in two and a half years. 

The survey showed house price expectations continue to increase, with a net 51 percent of New Zealanders expecting them to rise – the highest net reading recorded since October 2021.  

But ASB senior economist Kim Mundy believes even though people might be thinking house prices might start to lift from here, it's unlikely they'll take off.   

"I think the data in the last three months to January is kind of showing us that people think the downturn is probably done and dusted," she told AM co-host Melissa Chan-Green.   

"So we're through the sort of worst of it, I suppose you could say but I think there's like a little dose of caution that we've seen in the numbers that just suggests that even though people might be thinking house prices are going to lift from here, they don't necessarily think they're going to sort of be taking off, like what we saw in the previous housing upswing."  

The data from the survey showed house price expectations are on the up, but annual price growth remains at a muted 2.2 percent.  

Aucklanders are the most confident the tide has turned on house prices, with 56 percent of people surveyed saying house prices will increase.   

But while many people might think we are through the worst of the housing downturn, the survey found most are still firmly on the fence as to whether now's a good time to buy a house, with only 2 percent saying it is.   

On top of that, it also found higher interest rates are continuing to counter upward momentum, with 15 percent of people believing a hike could be on the cards. But this is down from 28 percent in the last ASB survey.   

The Reserve Bank (RBNZ) announced last week it's keeping the Official Cash Rate (OCR) at 5.5 percent for the sixth straight meeting after tightening it 12 consecutive times before that.  

It also comes after ASB and BNZ cut some home loan rates.   

Mundy told AM ASB isn't expecting the RBNZ to start cutting the OCR until November but added this survey's results could influence people's expectations when it comes to buying or selling a house.   

"When we look across sort of economics more broadly, expectations can have a really big play in what kind of happens," she said   

"If you're expecting house prices to increase, if you're either a seller or a buyer, that can change what sort of price you're expecting to receive, how much you think you might have to pay. If you are transacting in the market, it can actually have an impact on where the market's going."  

Watch the full interview above.