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The Westpac McDermott Miller household confidence survey for the quarter to March, taken before last Friday's Christchurch killings, was a reverse of the previous quarter, Westpac's chief economist Dominick Stephens said.
The Government's proposed capital gains taxes (CGT) may have also had a negative effect on results.
''The number of households reporting they are better off financially now compared to a year ago has been dropping steadily since mid-2017,'' he said.
Also, the number of households who expect to be better off in a year's time has fallen to its lowest level in almost a decade.
The index fell by 5.3 points to 103.8. A figure above 100 means optimists outnumber pessimists.
''The main reason given by respondents for feeling less confident is costs are rising faster than family incomes and for Aucklanders, in particular, [there is a] shortage of affordable housing,'' he said.
Mr Stephens said the survey may be giving an ''early read'', on how households reacted to the proposed CGT changes, given the report was released just before the survey of 1556 households began.
''Consistent with that, [CGT] March's fall in confidence was largest among those households who are on higher incomes,'' he said.