Home buyers most confident since 2003 in ASB survey

Home buyers are the most optimistic they've been since 2003, partly because they expect to take advantage of prices falling further next year, the ASB housing confidence survey for the three months to October shows. A net 24% of respondents thought that now was a good time to buy, with a net 25% expecting interest rates to fall further and a net 44% expecting house prices to fall further. This compares with a net 9% who thought now was a good time to buy in the previous survey for the three months to July and a net 55% who expected further house price falls. "An expectation for lower interest rates are likely to be feeding into the belief now is a good time to buy a house," ASB Chief Economist Nick Tuffley said. "Falling petrol prices will also free up cash for servicing mortgages, as will October's and next April's tax cuts," Tuffley said. A total 45% of respondents thought that now was a good time to buy, with 21% saying it was a bad time. "The outlook for the housing market remains bleak for the next year, with house prices expected to continue falling and housing construction contracting noticeably," Tuffley said. "It is still very much a buyer's market whilst oversupply continues to weigh on the market in some areas. Although house sales turnover began stabilising in the second half of this year, the escalation of the credit crisis has changed the global landscape. Caution on the parts of both buyers and lenders will have an impact on the market in the short term," he said. A total of 48% of respondents expected lower interest rates in the next year, with 23% expecting them to rise. 55% expected lower prices, with 11% expecting higher prices. "A pick-up in prices remains some way off, and the eventual recovery will be relatively modest," Tuffley said. "When purchasing, leave a buffer in your budget to allow for the risk of higher debt servicing costs and unexpected developments," he said.