ASB's latest Housing Confidence Survey shows there's has been a turning of sentiment, although there is still considerable uncertainty in the market.
According to the Survey, taken over the three months to the end of April, more New Zealanders were expecting interest rates to fall over the next 12 months than were expecting them to keep rising, as confidence grows that the Official Cash Rate has reached its peak.
However it also showed that although interest rate expectations had turned, conflicting factors and a cloudy economic outlook meant respondents were uncertain about the future of house prices and whether it was a good time to buy or not.
A net 1% of respondents said they thought interest rates would decrease in the coming 12 months, however that did not appear to have translated into purchasing confidence, with just a net 2% of respondents saying it was good time to buy and more than half saying it was neither a good time nor a bad time.
ASB Senior Economist Kim Mundy said the survey reflected a complex market picture.
"There are a lot of conflicting factors playing out in the market at the moment," he said.
"While we are at the peak of the interest rate cycle, there is still uncertainty about when the Reserve Bank will begin lowering the Official Cash Rate [currently 5.50%], which means affordability constraints are likely to remain."
"House price forecasts are being revised down as the market has been slower to lift than expected - ASB recently lowered its price growth forecast to about 1% year-on-year for 2024."
"Add to this an increase in new listings pushing supply to 10 year highs and a flat economic outlook and it is a complicated picture," Mundy said.
ASB is New Zealand's second biggest housing lender, with exposure of $73.815 billion as of March 31.
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40 Comments
Is now a good time to buy? To find out come to the Interest comments section buffet. On the menu today is the tough, over-cooked, and bitter truth of RP, or the sugar-coated bollocks of TTP. Whatever you decide, expect diarrhea and remorse.
Irrespective of which side of the table one is, the main question is how much debt is one taking on to acquire that house.. keeping 5 times DTI as the benchmark
Depends what you're trying to achieve.
Basic accomodation can be even less.
Forever dream homes, not so much.
I wonder "which side of the table" you are Houses Overpriced? LOL
Irrespective of which side of the table one is, the main question is how much debt is one taking on to acquire that house.. keeping 5 times DTI as the benchmark
Isn't the LTA closer to 3-4x annual h'hold income?
The other side of the question, is now a good time to sell? Things look pretty rough out there, but is it going to get worse or better over the next 12-18 months?
In AKL winter is never a great time to sell.... So this summer sellers are going to need a functional market with decent number of confident buyers. I am not sure that enough of the sellers have adapted to current conditions for this to occur, after all they will also be buying their next home in a weaker market.
There is too wide a gap between buyers and sellers perception of value to achieve much right now.
The removal of the FHB allowance and the new DTI, may well have a big impact in the regions.
'after all they will also be buying their next home in a weaker market'
Quite a lot aren't buying in a weaker market, they are going to retirement homes and I'm not sure retirement home costs are dropping much. Hence the reluctance to sell as they think they will be losing future accommodation costs even though the "losses" were illusory paper gains.
Sellers resilience is real here in Ham's northern suburbs. Loads of properties on the market, many for more than 3 months, still prices haven't moved an inch. At the same time the gap between what buyers can afford (= what the banks agree to loan at max debt) and asking prices is "only" around 7 to 8% based on my own experience and a few friends and colleagues looking to buy a house. That's not unrealistic to expect sellers and buyers to meet at some point in time and have sales happening again.
Oh and buyers expectations have already been lowered a lot, from 4 bedroom individual houses to 3 bedroom town houses. Next step is them to accept both kids to sleep in the same 9m2 bedroom an downsize to a 2 bedroom townhouse?
So the mega-bulls have concluded it's a "complicated picture"? Hmmm. I suspect they see trouble ahead.
I can't see many economic positives in my crystal ball.
Would be great to be proven wrong.
Hard to say if the lack of positives has justified the amount of bearishness for the past couple of years.
People are expecting Armageddon, maybe it's just going to be meh.
The reason there is a lack of positives, is because all indicators are firmly pointing in the negative direction.
Just because something hasn't happened yet, it doesn't mean it won't happen.
Another young professional engineer from work has decided to head over to Europe. Not happy with the direction the coalition is going so has decided to up sticks. Leaving in July. That's a full third of our total company that has left in the last year, all have cited the current coalition as one of the main reasons. We're having to subcontract to cover workload. All of them under 35 engineers/data scientists.
Our other friends, 40s with youngish kids (Lecturer/researcher and producer/editor) have also just told us they are off to OZ, and I quote "as it will be nice to finally be able to afford a nice home".
What is it about the coalition that these engineers say is moving them to abandon NZ for Europe?
Europe's a funny choice. Home ownership is even less unattainable most places, and politically much of it's shifting further right than NZ currently is.
Our problems are the same or worse most places.
Depends on where you move. But "most places" is false. New Zealand's ownership is around 65% (in 2018, will see what the census data shows in a couple of days).
29 out of 37 countries in this article have higher rates of ownership than New Zealand. UK is on par.
https://www.euronews.com/business/2024/05/13/housing-in-europe-how-do-h…
Typical painter BS. I lived in Europe, in major cities, and I can tell you it's much easier to buy a house than here:
- first the bank will limit your mortgage repayments to 33% of your income, leaving a lot more money for everything else and putting a lid on prices
- the mortgage rate will be fixed for its whole duration and is much lower than in NZ (today around 4% over 20 years, and is considered high)
- COL is much lower, basically anything you buy will cost you 25% less on average (in 2022: EU - 27 countries index = 85, NZ = 116) Prices - Price level indices - OECD Data
- Unis are free or have reduced fees for international students Study in Europe for free (or low tuition fees) | Study.eu
I'm current in Europe. I've yet to find a location that has me seeing a substantive improvement over NZ, and everyone here is complaining about the same things everyone's complaining about back home.
Maybe I'll print off some of your stats to show them they're wrong.
What does that prove? The situation isn't great anywhere? Yes we're well aware. People always like to complain? Yep, we know that too.
I've had the same feedback before, then I tell them the AVERAGE house price in NZ is NZ$930k (around 550k€). Real shocker to them, to the point they can't even understand how people do to make ends meet here in NZ.
What does that prove? The situation isn't great anywhere? Yes we're well aware.
There's a decent chunk of people who somehow think the problems in NZ are specifically indigenous, and can be overcome by relocating.
Instead of it being the same mechanism, happing everywhere.
The ownership rate isn't telling you what things are like today.
I'm travelling right through the continent (well, not Nordic Europe), and the story is the same in any populated centre:
- homes are expensive
- cost of livings gone bananas
- people's incomes aren't keeping up
- if you think NZ has a migrant problem, you ain't seen nothing
The data is predominately from 2022, article published on 13/05/2024 - 06:00.
But let me get this straight, you're travelling through Europe not on holiday, but to collate cost of living and home ownership feedback from random people on the street? Yes, those issues are prevalent throughout most developed nations, but your claim that "Home ownership is even less unattainable most places" is just false and cannot be supported by anecdotes.
Anywhere I go, I like to get a decent understanding of day to day life. Supermarkets, markets, transport, house costs, incomes, that sort of thing. Actually viewing those things live can be more informative than aggregated charts. Places I have been led to believe are relatively cheaper, using whatever line of reasoning, usually aren't. If someone here wants to point me to a Major European city where wages are really high, housing is super cheap as is the cost of living, let me know and I'll hop over.
About the only way someone can expect to shift geography and find themselves significantly better off doing the same role, is to go somewhere most people don't want to. Mines in Aussie, Mongolian Deserts, Solomon Islands, that sort of thing. Or there's some massive specific skills shortage (if you're a tradie, you'll make double in Germany. But then the tax is more, food is more, and houses anywhere convenient are pricier).
"Any major European city.." that's where you are going wrong. Most minor cities and even a lot of large towns in France, UK, Germany have equal or better infrastructure, job opportunities and entertainment options than Auckland. Property prices are half, sometimes less. You also won't need to do major construction works numerous times while owning.
If you reread just the part you quoted, you may change your mind...
"as it will be nice to finally be able to afford a nice home".
A nice home were the job is. Based on the people I have seen exit west in the last ten years, this is the primary reason. Also one that the speculators don't care about due to their narcissistic focus. Its is, after all, all about me (the speculator).
I am not sure OZ is a good place to rent or buy. just checked Sydney prices last night, I am not sure I have 2m AUD to buy in place I like in sydney.
I wouldn't pick Sydney, having lived there. Melbourne is a better bet but crappy weather. If you can stand the heat 3-4 months a year, Brisbane is much better bet.. No it's not a big country town, may be back in the 80s
https://www.brisbanetimes.com.au/traveller/reviews-and-advice/seven-big…
Sydney can work if you're still flatting with others and can be great but otherwise for buying it's better to go just about anywhere else in Australia, and do better than here.
What a really weird excuse to use. I have never met anyone (apart from a british ex-pat) who actually moved countries due to politics.
Could it be that they simply were not being paid enough for their skillset? I would expect $150k - $200k would be the minimum going rate for a competent engineer.
So Tauranga just overtook Auckland for the median rent, talk about follow the money if you bought a house down here in 2020.......
There are close to 25000 apartments in Auckland CBD. The median rent for the city always drops in Feb when the universities are back up and running.
Yes, again Tauranga, much like Queenstown, is a completely different market due to the its demographic and socioeconomic makeup. Its not really going to tell you much about the housing market through the lense of your average worker.
When things go wrong, head west!
If the house prices come down the rents should as well... wondering if it might be worthwhile to stay renting longer.
Generally, rents go up to cover the capital loss of depreciating houses. Just like other depreciating assets. Rental yields need to be about 30-40% for rental cars for example
😆🤣 LOL!
It’s almost insulting you think people would entertain this assertion…
The net migration data will be interesting especially if the YOY gain continues to trend downwards and the number of Citizens departing increases. As some in the comments have suggested, walk around your neighbourhoods you get the feeling there are bigger household sizes in some of these areas. How many in = how many out? It can’t be 1 to 1 or GDP per capita wouldn’t be decreasing.
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