31 August 2001
It’s A Good Time To Buy A House — Confidence Remains High
It’s a good time to buy a house according to most New Zealanders, shows ASB BANK’s latest Quarterly Survey of Housing Intentions.
High levels of confidence have been sustained over the last three months coming off a 12% leap the previous quarter.
During the three months to July a net 47% of respondents thought it was a good time to buy a home (made up of 55% who thought it was a good time to buy, and only 8% who thought it was a bad time to buy).
South Islanders (excluding Christchurch) were the most positive with a net 52% believing it was a good time to buy. They were followed by those who live in the top half of the North Island (excluding Auckland) with a net 50%.
Nationwide, a net 24% of all respondents expected house prices to rise. This figure has remained stable for the third consecutive quarter.
ASB BANK Senior Economist Rozanna Wozniak believes that confidence is being underpinned by low interest rates and low house prices.
Of those respondents who thought it was a good time to buy, 48% cited favourable house prices as a reason and 43% cited favourable interest rates—a leap of nearly 10%.
“Respondents in Wellington and Christchurch were less optimistic than the rest of the country with confidence levels at around 40%. Confidence in Christchurch dropped by 12 percentage points this quarter to a net 40%.
“Christchurch has struggled to follow the national recovery in real estate turnover and house prices are continuing to edge lower, which helps explain the slightly lower levels of confidence as well as this quarter’s drop in confidence.
“In contrast, lower levels of confidence in Wellington reflects the high level of house prices and its impact on affordability. Nevertheless, Wellingtonians still appear to be too optimistic in their expectations that house prices will continue to rise. That market is showing signs of losing the momentum it has sustained for so long.
“Recent housing statistics suggest some reason for caution. Although national real estate turnover remains well above the lows of last October, it has slowed in recent months, even after adjusting for seasonal factors. In addition, data from Quotable Value shows that house prices continued to edge lower during the June quarter.
“Most of the softness in house prices was concentrated in the urban areas. In contrast, house prices rose, on average, in the smaller cities and towns. Longer term, this upward momentum in the regions is unlikely to be sustained, as many of the smaller towns have a declining population.
“We’re confident that housing turnover will turn upwards again and house prices will stabilise as the warmer months approach.”
“Housing confidence remains high and the residential construction cycle appears to have turned the corner. In addition, the economy is showing signs of life after a slow start to the year, and higher rural incomes are starting to impact on the cities.
“Mortgage interest rates remain at stimulatory levels, although higher rates are expected next year, which is likely to cap the housing sector’s recovery,” she says.