A net 11% of respondents in an ASB survey on housing confidence expected house prices to rise in the next 12 months, up from a net 9% who expected higher prices when surveyed three months earlier.
ASB cited the March 10 post-quake emergency cut in the Official Cash Rate for the improvement in confidence and for an increase in expectations of continued low interest rates.
The ASB Housing Confidence Index climbed two percentage points over the three months to the end of April, with a net 29% saying that now is a good time to buy a house.
"While more people now expect house prices to rise over the next year, that sentiment remains modest by past standards,” said ASB Chief Economist Nick Tuffley.
“House price expectations remain highest in Auckland, in keeping with recent housing market data which shows stronger activity in this region compared to the rest of the country.”
There was a sharp drop in housing confidence and price expectations in Christchurch over March.
"While there was a considerable rebound in April, housing confidence in the region is still softer than overall confidence in New Zealand. Meanwhile, house price expectations are more resilient, with a net 9% of respondents in Christchurch expecting a rise in house prices over the quarter – only slightly lower than the nationwide average of 11%," ASB said.
The survey found a net 35% of respondents saw interest rates rising over the next year, down from a net 55% in the January quarter who saw rising interest rates.
"This is unsurprising in light of the 50 basis point decrease in the OCR in March, and the resultant lower mortgage interest rates, which have increased the appeal of housing as an investment, despite the tax changes that came into effect on 1 April," Tuffley said.
ASB said recent market data had also shown tentative signs of an improvement in housing market activity, including a drop in the median days to sell to 45 days, although it remained above the long term average of 38 days.
“Despite renewed interest in housing, it appears buyers are still in no rush to purchase,” he said.
“We expect house prices to grow modestly at a rate of around 3 percent over the coming year. A combination of a contained level of housing inventory, positive population growth and the recent drop in interest rates will underpin a gradual recovery in underlying housing demand over the coming years."