More New Zealand consumers expect house prices to rise in the next 12 months, as demand spurred by record-low interest rates outstrips supply.
Sixty-four per cent of respondents in an October survey expected values would increase over the next year compared with 61 per cent in July, ASB Bank said in an e-mailed report. The proportion that expects lower prices dropped to 8 per cent, from 11 per cent.
Rising values may limit the central bank's scope to cut rates in an economy where unemployment soared to a 13-year high and retail sales slumped last quarter. Fewer consumers expect higher borrowing costs over the next year, and 42 per cent predict no change, the most since 1999, the survey showed.
"This more widespread belief that interest rates will remain low could underpin demand" for houses, Auckland-based ASB economist Nick Tuffley said in the report. "Expectations of higher prices are firmly embedded."
Tuffley is one of 13 economists surveyed by Bloomberg News last week who forecast the central bank would keep the official cash rate at a record-low 2.5 per cent, until at least July. Three predict a rate rise in the first half.
House prices rose 6.9 per cent last month, the Real Estate Institute said on November 9. In Auckland, home to a third of the nation's 4.4 million people, values surged 14.4 per cent amid a shortage of new listings.