Young people and first home buyers are feeling a lot less confident about life than they were, according to the latest ANZ-Roy Morgan Consumer Confidence Survey.
The surveys' results come at a time when the Reserve Bank is considering applying "speed limits" on high loan to value lending - a move that would affect the ability of young, first-time buyers to get a home. The results also come at a time when there are expectations that interest rates will start to rise again soon - with fixed mortgage rates edging up - while house prices are continuing to rise.
"Young adults and first home buyers recorded the largest reduction in confidence – they are the most exposed to rising interest rates," ANZ economist Steve Edwards said.
"Respondents aged between 18 and 24 years recorded the largest easing in confidence, dropping 11 points to [an index score of] 128. The next-oldest age cohort (25-34 years old) reported the second-largest easing in confidence, dropping 7 points to 121,": he said.
Auckland was the only region to record a lift in confidence, rising 3 points to 124.
"This improvement coincided with the Government’s announcement of a major investment in the city’s transport infrastructure," Edwards said.
Canterbury, which saw a six-year high in confidence a month ago on the back of the Christchurch rebuild, recorded the largest reduction in confidence, falling 15 points to 119.
Auckland's positive sentiment is also being driven by the fact that it is in the engine room of strongly rising house prices.
Edwards said that for the second successive month, house price expectations lifted in Auckland and Canterbury. Those for Canterbury rose 0.3 percentage points to 5.6%, a new high, while Auckland recorded the second-strongest rate, at 4.8%.
He said an improvement in wealth through rising house prices in NZ’s largest real estate market (Auckland) continued to guide purchasing trends for major household items.
"Three out of every five respondents believe it is a good time to buy a major appliance – unchanged from last month and a whisker below the five-year high of 62% measured two months ago."
Overall consumer confidence remained high, though it decreased slightly this month.
For the first time in three months, however, a greater share of respondents felt that versus a year ago they were worse off financially (34%, versus 31% feeling better off).
"Rising petrol prices eating into disposable incomes are the likely cause of this turnaround. In conjunction, higher longer-term fixed mortgage rates over the month are a hint of things to come for homeowners," Edwards said.
But overall, a robust confidence reading was signalling stronger economic growth is around the corner, Edwards said.
"While easing marginally in July, consumer confidence remains not far off the three-year high seen in June, while business confidence was also strong last month. Our combined business and consumer confidence measure is indicating economic growth will accelerate to around 4% by the end of the year, which would be the economy’s best performance since 2007," he said.
26 Comments
Some of us gave up a long time ago - the Auckland Property market long ago ceased to be a place where someone would look to buy a home - our rented home is the owners first home, which the bank encouraged them to keep when they bought a new one - it was encouraged by "favourable terms" according to the landlord. To say that confidence has dropped is like saying "I think this computer thing might catch on" - your living in a dream world - spend a day in the real world, with real people and you'll see that your anal-sys is a badly timed joke. Confidence left the building a longtime ago, resignation to staying out of this completely self induced, vested interest madness is your "new normal". Who wants to be on the leverage boat when that S@%T sinks?
Now let me think, do they raise the chicks, then lay the eggs, then build the nest? Which sequence did best evolutionwise?
We bought a shack - not much more than a hut - went to Sydney, earned flat out for a year, added to the 'house', then had our kids. I appreciate you can't turn the clock back, but you did place yourself in the corner you're in. This widening average gap between incomes and things purchasable was predictable a long way out.
I think I'd be starting up a daycare - save your cost in a stroke and with a couple more paying you'd be ahead, with no travel costs.
Quite sick of hearing people on here judging others choices. We and another couple we know were advised by doctors to think about having kids before 30 for fertility reasons. Neither family own their own home yet. But thankly we are not in the same position of other friends who put off kids till their mid thirties who are now struggling with fertility issues. Planning how life turns out is not so cut and dry. It's all a bit of a kick in the teeth when we have a family income that is in the top 10% income bracket, which puts us in the income earning group that pays for over 70% of the taxes in this country and still feel like owning a home of our own is getting further out of our reach.
Apologies if you were offended - it was a lightweight jab at Brendon, who can handle it.
Taxes are part of bing past of a society. The alternative is being part of a dog-eat-dog non-society - and none of us want to go there, that's Mexico, or worse.
Are you familiar with Edward de Bono?
Maybe if you had used some of edward de bonos lateral thinking you may have realised that giving out advice about taxes being a part of society was going to equally offend. I didn't suggest that we shouldn't have taxes as part of society. It is just quite frustrating that the taxes we pay are being transferred to property investors who are climbing all over each other to maintain large portfolios of rental properties to subsidise rent for us lowly renters. I believe the government could do more to help first home buyers.
First time buyers are the main reason the market is in a bubble. In the last 17 years we seem to have gone from 25years and 80% to 95% and 30 years, that slippage just porks the first buyer properties higher and higher, which has the knock on effect. Read up Steve Keen's explanation.
So actually 15 years ago the then Labour Govn should have brought in a 80% LVR.
regards
I would be very interested to see the results of a poll on what percentage was the deposit and where that deposit came from for people for their first home. I don't think I have spoken to a single person/family who actually saved a 20% deposit and purchased their first home without family help or taking out a second mortgage, irrespective of what generation they are from. In my parents generation there were second mortgages and housing corporation loans. All the people from their generation I have spoken to didn't save the 20% deposit on their own. So the percentage of the deposit is irrelevant in my opinion, it is serviceability. The bubble is not caused by first home buyers, it is speculators.
I think you are correct Maybar with the speculators causing the bubble. I was involved today in something where I heard straight from the speculators mouth that this person owned multiple properties (and was probably still buying them) - not in Auckland but two small rural New Zealand towns and there could be other towns that we didn't hear about - and guess what? He wasn't a New Zealander. He was Australian. He didn't live in NZ but had an address and property manager in New Zealand where the banks who were loaning the money to him to buy these properties cld contact him for legal reasons and presumably tax breaks.
If you have 10k and 90% on a 100k house instead if the house is half price, 50k you have 10k and 80% LVR.
There is no difference in the amount you have saved.
Right now its a 2x bubble, when it pops at 90 or 95% LVR you are well underwater....
Serviceability is also easier.
If you cant understand this then you should not be buying...if you do well you will deserve the pain you get.
regards
I don't think that's the conclusion of Steve's diatribtes on the subject. He calls it the 'first home vendors grant' for a reason. If the Australian property bubble bursts (which it eventually must) then the guys who got in today are going to be left underwater even if they availed themselves of the grant. Its the guys who get out pre-collapse that are the beneficiaries of the grant (counterfactually to no grant and earlier price collapse), but they don't have to be the earlier first home buyers at all. The first home buyers are being encouraged into high leverage and actually its hard to paint them as winners just because they have to service a ~30 year payment schedule instead of a ~25 year or ~15 year schedule. The reward for paying the mortage for the extra years is that if the bubble keeps going you get some capital gains at the end (when compared to renting).
I was being polite - as I do early in an interchange. Doesn't always last.....
You should have said it was landlords/investors who were annoying to you - what you mentioned was taxes.
Govts don't have to target 'first home buyers', that's not the driver. They have to tackle all the chain-of-levered-renters folk who live off the tenant incomes. That's an easy stroke of the legislative pen, but won't happen while there are more owners that wanna-be owners.....and that will always be the case. Tax the hell out of secondary property, is all it takes, and everyone is better off except the non-contributors. Who we appear to abhor equally.
Google: seawind 24 images for my bit of LT. 1 year, 2+2 family, 3000 kn/miles.
Good luck to you
For as long as folk believe house prices will rise,
Edwards said that for the second successive month, house price expectations lifted in Auckland and Canterbury. Those for Canterbury rose 0.3 percentage points to 5.6%, a new high, while Auckland recorded the second-strongest rate, at 4.8%.
they will rise....
The facilitator of those feelings: the credit fuelled boom in house buying - either obtain a 80% plus lvr loan, or re-pledge the previous property you just bought..
The sponsor: the banks ….
Their method: taking the opportunity of off shore funding (note lending ratio >140% of deposits)
The banks, with no restriction on the volume of money (other than their own judgement of when is too much) act more like an electricity network company, where through put (plus margin) is key to their rewards…..
of concern is that no one has any equity......
Oh God - here we go again - when I was young - MOAN from those under 40 - in the mid-60's when most BB's got married (very young as well) we didn't expect to own our first home. Most of my friends ended up renting or living with their parents for at least two or three years. Then we bought homes with mortgages through Life Insurance policies taken out - banks wldn't lend to us. And we bought not where we wanted to in "posh" or desirable areas but in places that were cheap and we could afford - my first home was right next door to a Railway settlement that was the least desirable area in the town 45 years on very desirable now. So what's changed! Everybody's expectations and greed from the banks. We struggled to get mortgages. And we ate mince for dinner a lot during the week! - God how I hate mince still. However, looking back they were some of the happiest of times in my life - struggling was good for us.
Still eating mince. keep frugal on the daily/weekly expenses then can spend on big ticket/travel/investments ...
Our first mortgage was @ 20.5%
My first boss said: a man should always have a mortgage , [ i guess to keep leveraging, stretching].
Mortgage repayments still a better saving discipline than consumer spending on devaluing stuff. Esp for gen x y.
We're still eating mince too but nowadays have much more imaginative ways of cooking it! And we can make it last two nights! Our first mortgage interest rate was 9% but then gradually got higher and higher. Still managed repayments on one wage though as we didn't have a huge mortgage relative to the cost of the house - lenders wldn't allow it. So maybe the Reserve Bank has it right this time! Hard on the young ones yes. But I've just watched an advertisement on the TV for a newly built home - this is what some of the trouble is - that home was something that would cost hundreds of thousands of dollars to build (let alone the cost of the land which looked like a couple of acres) and yet they show a young family with two children owning it! Aspirational yes but let's get real for goodness sake. Magazines as well are full of wonderfully art directed photos and people think this is the norm and expect to have it NOW!
Thank you Von, very well said. What needs to change is first home buyers expectations, they all seem to think that a 4 bed house on a quarter acre in Remuera is their right. My first purchase was a 45sqm, ground floor flat in London, it wasn't glamorous but it was afforadable. You gotta start at the bottom.
You can do a lot with mince.
Add to this the insurancechanges and the fact they could be buuying an ex Clan lab
really feel for my young ones
http://tvnz.co.nz/fair-go/could-your-dream-home-former-p-lab-video-5486…
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