The latest survey shows that the percentage of respondents expecting higher house prices has fallen to 58.5% from 67.7% in March and 70.9% last September.
The measure was as low as 34.1% in the middle of 2011 but has not been below 60% since September 2012.
The median expectation of price rises over the next year has dropped from 5% last quarter to 3.5%.
The Reserve Bank said the survey also showed that monetary conditions were perceived as being easy by many respondents.
“However, throughout the year firmer conditions are expected as the number of respondents expecting easy monetary conditions progressively reduces across the expectation horizon.”
When the survey was completed, the net percentage of respondents who thought monetary conditions were easier than neutral was 40%, compared to 57% last quarter.
By the end of March next year, tighter than neutral monetary conditions are expected by 21%.
The 90-day bank bill rate is expected to be 3.5% at the end of June, about 20 basis points higher than the rate prevailing at the time the survey was taken. By March 2015 the survey respondents thought 90-day rates would have increased further, to 4.1%.
Ten-year government security yields are expected to be around 5% at the end of March 2015, implying a positive yield gap of 0.9 percentage points.
The gap has narrowed from 1.5 percentage points since last survey, as a result of longer-term interest rate expectations remaining fairly stable while short-term interest rate expectations have risen.
