Poll shows sea change in house price expectations
Property Institute Poll shows sea change in house price expectations
Property Institute of New Zealand Chief Executive Ashley Church says the latest Institute poll points to a sea change in sentiment about house prices.
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 30% - the lowest level since the poll started in November last year and well down on the June result of 43%.
Mr Church says a definite trend is now clear.
“When we started this data series in November last year, the number of New Zealanders expecting house prices to increase in the next six months outstripped the number of people expecting prices to flatline by a huge margin. But our August poll, shows the number of people now expecting house prices to rise, is dwarfed by those expecting property prices to stay the same”.
Mr Church says that those who are expecting ‘no change’ in prices have jumped from 28%, in November last year, to 45%, in August - while those expecting property price increases have nearly halved from 56% to 30%.
However, Mr Church says that, while the change in poll results is dramatic, it doesn’t reflect widespread panic about house prices falling.
“The expectation of a decrease in prices has risen from a low of 8% in November – but it’s still only at 17% - which suggests that people haven’t bought into the hype about a ‘correction’”.
Mr Church says that the results can partly be explained by the fact that this is an election year. He points to recent data released by the Property Institute in partnership with data company Valocity which indicates that that there is a direct relationship between elections and a slowdown in the housing market and he says that the turnaround in sentiment illustrated in the Institute’s latest poll may be a reflection of that.
“Since April, the trend has been distinct. Whether or not it’s a combination of the election, Reserve Bank constraints on the market or bank rationing of credit, this latest poll shows that Kiwis are not expecting house price inflation to continue at anything like the levels they were expecting just last year”.
He says warnings that mortgage interest rates are trending upward is probably also impacting on market perceptions.
“Clearly, many home owners are nervously eyeing their borrowing levels and monitoring interest rates, while investors may also be reassessing their position. It’s a scary time for those who are highly geared”.
Mr Church notes that fears about foreign investors having an impact on house prices are also tapering off with the poll showing that people now see other factors as increasingly important.
“In every poll we’ve done we’ve asked ‘who has the biggest impact on house prices’ and foreign investors have repeatedly been singled out as the biggest factor by a good margin. But our August poll shows that developers are now right up there.”
The poll, which asks respondents to rate who has the biggest impact on house prices on a scale of 1-10, gave foreign investors a score of 6.8, while developers get a 6.7. Local investors are in third place at a rating of 6.0.
“There’s been a slight softening in people’s attitude to foreign investors, and a hardening of their views towards domestic influencers”.
NOTE: The poll was conducted by Curia Market Research in June and has a 3.2% margin of error. The polling results are attached – 5 pages.