Poll shows big drop in house price expectations
6 July 2017
Property Institute Poll shows big drop in house price expectations
Property Institute of New Zealand Chief Executive Ashley Church says the latest Institute poll confirms recent figures from REINZ and Barfoot and Thompson and shows that there has been a big drop in the number of people expecting house prices to rise in the next six months.
According to the regular poll, which is commissioned by the Institute, the number of people expecting house prices to rise in the next six months is down to 43%, the lowest level since the poll started in November last year.
Mr Church says a definite trend appears to be developing, with more people becoming less bullish about house prices (graph below).
"Our June poll shows that the number of people expecting house prices to increase in the next six months has dropped 12% since our last poll in April and now sits at 40%. Meanwhile, the number of people expecting prices to stabilise is up 4% to 40%".
"The number of people expecting a decrease in house prices is up 5% to 12% - a big jump in one month to be sure - but an indicator that the vast majority still aren't buying into the idea of a market correction".
Mr Church says the trend becomes more pronounced when the latest results are compared against the first Institute Poll, taken in November of 2016.
"Back in November 56% of people polled were expecting house prices to keep rising - which means we've seen a 13% drop in expectations in the past eight months".
The Poll shows that women are more likely than men to expect prices to stay the same (46% vs 34%), and fewer women than men think prices will keep rising (38% vs 50%). The expectation of house price increases is also considerably lower in Auckland and Wellington (both at 37%) than in other parts of the country - with 53% in Wellington, 50% in towns and 47% in provincial cities still expecting continuing price increases.
Politically, Labour voters are most likely to pick increasing house prices (54%) with National supporters least likely to pick rising prices (34%). New Zealand First voters are most likely to pick a decrease (25%) while those who vote National are most likely to pick a stabilisation in house prices (52%).
The Institute survey also asked respondents who they thought were responsible for having the biggest impact on property prices, and once again foreign investors have topped the list, with developers coming second and local investors coming third.
Mr Church says that, overall, the Survey confirms the view of the Institute that the 'artificial downturn' engineered by the Reserve Bank has worked.
"There's no question that the imposition of high LVR restrictions has affected the ability of the market to operate and has dramatically slowed the market - particularly in Auckland. What's less clear is what the impact of that will be on supply given that Auckland still has a serious housing shortage and no clear solutions to reduce that deficit".
Mr Church says that rationing of finance, by Banks, is now also further exacerbating the problem.
"There's no shortage of demand - there's just a shortage of money".
Mr Church says that this is probably best exemplified in the survey result showing that 18 to 30 year olds are the most likely group to expect continuing house price inflation (58%).
"This is incredibly sad because these are the same people who are most disadvantaged by the current slew of policies. They're the people who, in many cases, can't get into the market because of the new rules and who are seeing their opportunity to get into a home disappearing into the sunset".
Mr Church says that he expects the deterioration in house price inflation expectations to continue over the next few months but that sooner or later a 'day of reckoning' will have to come.
"You can't artificially constrain house prices forever when you have a shortage of homes - but clearly you can do it for a while - so there's a reasonable chance that the number of people expecting prices to stay the same will exceed those who think prices to rise, by the time of the next survey".