ASB NZ Housing Confidence Survey
House price expectations approach record levels
• Nationwide house price
expectations rise again, approaching record levels
• Concern over housing supply hits Auckland housing confidence
• Low interest rates and supply constraints to drive further nationwide price growth
Nationwide housing confidence remained steady as price expectations approached record levels in the three months to October, according to the latest ASB Housing Confidence Survey.
Expectations of further increases in house prices are becoming firmly embedded with a net 56 percent of respondents now expecting prices to rise over the next 12 months. “Price expectations remain highest in Auckland and Canterbury where supply is tightest,” Mr Tuffley says. “However housing confidence outside of the two main centres is climbing suggesting that market buoyancy is spreading throughout the regions
Nationwide, the ASB Housing Confidence Index edged up by one point over the quarter, with a net 23 percent of respondents saying that now is a good time to buy a house, compared to 22 percent in the previous quarter. The Index has slowly risen from a net 20 percent at the beginning of the year.
In contrast to the nationwide overall rise in the Index, housing confidence in Auckland has been falling steadily over 2012, and is now down to just 8 percent, while the rest of the country has been showing increased confidence that now is a good time to buy.
ASB Chief Economist Nick Tuffley says that this reflects the relatively tight conditions in the Auckland market. “Levels of new listings and housing inventory have remained low in the region, and clearly that is making it difficult from a buyer’s perspective.”
Housing demand is unlikely to drop off, with intensifying expectation that interest rates will remain at low levels according to the latest survey. Over 40 percent of respondents expect interest rates to remain on hold over the next 12 months, the highest proportion since 1999. “The broadening belief that interest rates will remain low could further fuel interest in entering the market,” says Mr Tuffley.
Mr Tuffley expects the state of the housing market to rule out interest rate cuts in the near future. “Low interest rates are becoming increasingly stimulatory, and the RBNZ will be mindful of the risks of stoking the housing market further. But, with the broader recovery still very gradual and the New Zealand dollar high, Official Cash Rate increases are still some time off. We expect the OCR to remain on hold until September 2013, with gradual increases occurring from that time. Meanwhile, supply constraints and the low interest rate environment should drive further growth in house prices of around four percent next year on a nationwide basis.”
The full ASB NZ Housing
Confidence Survey report is attached