Tuffley said expectations for lower interest rates have eased, with net 36% of respondents expecting rates to fall – down from 48% last quarter.

“This shift suggests people are recognising we’re nearing the end of the easing cycle. But if economic conditions remain soft, expectations for more cuts could resurface.”

Earlier this month, the Reserve Bank cut the Official Cash Rate (OCR) to 3%, marking 250 basis points worth of cuts since August last year.

According to the ASB Housing Confidence Survey, house price expectations also softened.

A net 18% of respondents expect prices to rise over the next 12 months – down from 26% last quarter.

Auckland saw the sharpest drop in confidence, with only net 14% expecting gains, compared to 33% previously.

Those in the North Island, excluding Auckland, were the most optimistic about price gains.

Meanwhile, sentiment in the South Island fell sharply to 19%, down from 30% in the previous quarter.

Tuffley said that while the overall outlook remains positive, the pace of recovery is slower than anticipated.

“Market conditions are shaping up for a gradual uptick, but persistent headwinds – including high inventory, weak demand, and economic uncertainty – mean we’re unlikely to see a sharp rebound anytime soon.”