Expectations that the housing market upswing would continue through the year have been dashed by the economic fallout from Covid-19.
File photo. Photo: 123RF
The latest ASB Housing Confidence Survey shows confidence has fallen to a near 8-year low.
Fourteen percent of respondents are now expecting higher house prices over the next year, down from 54 percent on the last quarter, 14 percent are expecting higher interest rates and 33 percent think rates will drop.
A slim majority now believe it's a bad time to buy a house. The quarterly survey spoke to 2737 people.
ASB Chief Economist Nick Tuffley said the market had clearly been picking up momentum to one where everybody essentially hit the pause button.
He said it wasn't a surprise that people felt some uncertainly about the housing market and whether it was a good time to buy.
''Having said that, it is one that will be rapidly becoming a buyers' market over the course of this year,'' he said.
He said it is an environment where people just did not know what is going to happen, other than the market not going to be as hot as it had been.
''It's quite interesting to see that shift from people saying is it a good time to buy a house to being a little less positive about that.''
Tuffley said affordability had certainly improved.
''Where is the bottom of house prices? I think that part of the story is going to be a little bit unclear for people over the next few months.''
He said the bank's view was that house prices would fall somewhere between 5 and 10 percent overall, with some regional variations.
''We do need to be mindful that it is really uncertain times and this is an economic environment that not one of us will have seen before in our lives and hopefully won't again.''
Tuffley said with recessionary economic conditions triggering job cuts and a big hit to household income growth, the survey's results are not surprising.