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ASB Housing Confidence Survey - Price expectations cool

Embargoed Media Release
ASB Housing Confidence Survey

EMBARGOED until 0500 Monday, February 20, 2017

Price expectations cool

A cooling housing market appears to have cooled house price expectations

Sentiment edges up, but remains near record lows

Interest rate expectations climb higher

Buyer sentiment has improved in the ASB Housing Confidence Survey, but ultimately, New Zealanders still think it’s a bad time to buy a house.

The January quarter report finds a net 17 per cent of people think it’s a bad time to buy a house, up from a net 26 per cent (a historical low) in October.

Price expectations have dipped across the country as fewer people (net 46 per cent) believe house prices will rise (compared to 58 per cent three months ago). That’s the second lowest level for price expectations since 2012.

The dip was most pronounced in Auckland followed closely by the rest of the North Island.

ASB Chief Economist Nick Tuffley says the survey findings correspond with a significant drop in housing market activity following the Reserve Bank’s latest investor-focussed loan-to-value ratio (LVR) restrictions.

“Not only has housing market data shown a fall in sales activity recently, it has also suggested house price growth has slowed in a number of regions,” Mr Tuffley says.

“It is likely that the weaker market activity has impacted on respondents’ house price expectations this quarter.

Still a bad time to buy, just not as bad

Although respondents think now is a better time to buy than last quarter, ultimately respondents consider it’s a bad time to buy a house.

“Elevated house prices are likely to still be weighing on sentiment, as are the higher deposit requirements now facing investors in particular,” Mr Tuffley says.

“On balance, respondents see it as a bad time to buy, but are slightly less pessimistic than three months ago.”

Higher interest rates on the horizon

It seems Kiwis think the days of super low interest rates are over, Mr Tuffley says.

After falling sharply in late 2015, interest rate expectations have rebounded over the last six months to see a net 37 per cent expect higher interest rates over the coming year.

“Recent lifts in mortgage rates appear to have respondents bracing themselves for more. While we expect the RBNZ to leave the OCR on hold until late 2018, funding pressures and higher offshore interest rates could see mortgage rates creep higher,” Mr Tuffley says.


Results at a glance

Click for big version.

Note: The ASB Housing Confidence Survey is constructed from data received from 2275 individual respondents.

The full housing confidence report for the three months to January 2017 is attached and will be available online tomorrow.


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