The ASB Housing Confidence Index edged up by one point over the quarter, with a net 22%  of respondents saying that now is a good time to buy a house, compared to 21% in the previous quarter.

But in Auckland, confidence is dropping. A net 12% say now is a good time to buy, down from 18% last quarter.

ASB Chief Economist Nick Tuffley said this drop reflected the lack of supply in the Auckland market.

“Levels of new listings and housing inventory are very low in the region, and the latest drop in confidence suggests it is increasingly becoming a seller’s market. The experience of the mid-2000s tells us that a weak confidence reading does not imply that people don’t want to buy, just that they view market conditions as challenging from a buyer’s perspective.”

Overall, a new 51% of respondents expected prices to increase over the next year, a 6% increase on last quarter.

Tuffley said the survey showed expectations were highest in Auckland and Christchurch.

In Christchurch, a new 77% expected higher prices over the next 12 months. Tuffley said prices were being pushed up by a shortage of habitable properties in the city.

“That situation will start to ease, though, as rebuilding work gets under way in earnest,” he said.

Tuffley said house price increases would be constrained by a cautious approach to debt, weak net migration and modest employment growth.