NZ On Verge Of Surge In Housing Activity
New Zealand could be on the verge of another surge in housing activity according to Anthony Byett, Chief Economist, ASB BANK.
The latest ASB BANK Quarterly Housing Confidence Survey reveals the majority of people expect rising house prices, an expectation that waned around July but has come back strongly in recent weeks.
“While other confidence indicators in the latest survey are mixed the overall outlook remains positive, underwritten by persistently strong demand for houses.
The mixed nature of people’s response to the survey relates to the disparity between high expectations of rising house prices but a low belief that now is a good time to buy.
The survey shows that on average over the September quarter, 45% of respondents believed that house prices would increase (54% in the June Quarter), 24% believed it’s a good time to buy a house (35% in the June Quarter) and 53% believed that interest rates will increase (71% in the June Quarter).
The disparity is particularly high in Auckland with an average of 53% of respondents believing house prices will increase with just 17% believing it’s a good time to buy.
“The mixed confidence levels uncovered by the survey are likely to be due to people’s anxiety regarding the global economic outlook and, to a lessor extent now, expectations of higher interest rates” says Mr Byett.
“The anxiety about the global economic outlook is being driven by a faltering global economic recovery, falling share prices, rising oil prices, the threat of terrorist attacks and the growing prospect of war in Iraq. “This same sort of anxiety is being picked up in other measures of confidence about the general economy—so it does not just relate to housing confidence.
In this regard, the current issue of ‘Rotting Homes’ does not appear to be affecting housing confidence in general although there will invariably be less confidence now in some types of houses.
“More generally, the situation of strong demand and limited supply persists and the overall outlook for the housing market remains positive. In recent weeks, fixed home rates are declining and housing activity is increasing again.
“Views on whether it’s a good time to buy a home may become more positive now as people become less fearful of higher interest rates.
“The potential for higher house prices appears greatest in Auckland, both due to the underlying supply and demand situation and to the expectations shown in the latest ASB BANK Quarterly Housing Confidence Survey.
On average 53% of Aucklanders believe house prices will increase, which is 11% ahead of the rest of the North Island at 42%, and 9% ahead of Mainlanders of whom an average 44% believe house prices will rise.
“The situation is ripe for a busy summer in the housing market,” says Mr Byett.