Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Price expectations remain firm in a challenging market

Price expectations remain firm in a challenging market

• Tight supply continues to drive expectations of increasing house prices

• Expectations of interest rate rises remain high

• The challenging conditions drove sentiment about buying a house to its lowest point since 2007

Buyers becoming increasingly negative while house price expectations remain resilient
The mood of prospective homebuyers has hit its lowest point since 2007 according to the latest ASB Housing Confidence Survey.

ASB Chief Economist Nick Tuffley says a net 11% of all respondents are seeing now as a bad time to buy.

“Recent interest rate rises, the steady increase in house prices and lending restrictions have all combined to create a growing mood of pessimism amongst prospective buyers.”

Tuffley notes that sentiment has most notably declined in Auckland with a net 21% seeing now as a bad time to buy, compared to a net 10% in April’s survey.

“Auckland continues to record stronger house price gains than anywhere else in the country while a lack of housing supply is likely causing frustration for buyers in both Auckland and Canterbury.”

The view that house prices will continue rising remains prevalent nationwide with a net 49% of respondents expecting house prices to increase.

“Despite the OCR rises earlier in the year and subsequent flow on effect to mortgage rates, New Zealanders remain confident that house prices will continue to increase.”

“Again, this is evident in Auckland and Canterbury, where demand is the hottest and where other housing pressure points such as increased migration come into play. However, outside of these two centres, house price expectations are elevated when compared to the relatively modest gain in actual prices.”

Housing supply provides challenge for buyers
Housing supply remains a factor impacting both house price expectations and housing market sentiment.

“There are a low number of houses for sale nationwide. Supply will lift gradually as construction picks up, but this process will take time. Throw into the mix the good performance of the economy, and we see no immediate driver for house prices to fall or interest rates to come down in the near future.”

“Consequently, we feel that affordability issues are likely to impact housing market sentiment for the next year or two.”

Interest rates
Expectations that interest rates will continue to rise remain high with a net 69% expecting interest rate hikes.

“We agree with the majority of respondents who expect interest rates to continue to rise, however we are expecting the RBNZ to hold off raising the OCR again until early 2015. We anticipate the RBNZ will lift the OCR to 4.5% over 2015, a further 1% above current levels, which would result in further mortgage rate increase for borrowers.”

Results at a glance

• A net 49% of respondents expect house prices to increase in the next twelve months;

• A net 69% of respondents expect interest rates to rise in the next twelve months; and

• A net 11% of respondents believe now is a bad time to buy.


ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Manawatu-Whanganui Projects: PGF Top-Up To Rural Broadband Roll-Out

The government has effectively raided the $3 billion Provincial Growth Fund to top up the budget for the second phase of its rural broadband initiative, filling in mobile 'black spots' and ensuring broadband is available to marae that don't have access now. More>>

ALSO:

Other Windy Cities: Auckland-Chicago Named A Top 10 ‘Most Exciting’ New Route

The inclusion of Auckland-Chicago on Lonely Planet’s Where to fly in 2019? The 10 most exciting new flight routes list comes just two weeks before Air New Zealand prepares to celebrate its inaugural flight to Chicago’s O’Hare International Airport on 30 November. More>>

Deadly Strain: ESR Ups Its Reporting On Meningococcal Disease

The increasing number of cases of Group W Meningococcal disease (MenW) has prompted ESR to increase its reporting on the disease to the Ministry of Health. ESR has upped its reporting to weekly. More>>

ALSO:

Very Small Things: "Game-Changing" 3D Printing Technology Launched

New Zealand microfabrication researchers Andrea Bubendorfer and Andrew Best, the co-inventors of a new way of fabricating very small things with Laminated Resin Printing (LRP), are part of Callaghan Innovation’s MicroMaker3D team launching the new patent pending technology in the US this week. More>>

ALSO: