An increasing number of people are expecting house prices to fall according to the latest ASB housing confidence survey.

According to TVNZ, figures show optimism in the housing sector is continuing to decline, with more than 50% of those surveyed believing that house prices will fall over the next 12 months.

But economists expect one of the reasons behind the results is that people are expecting mortgage rates to rise, when in actual fact they have started falling.

Chief economist Nick Tuffley says the risk of income losses and the likelihood of only modest income growth over the next two to three years suggest any eventual pick up in housing demand will be moderate.