ASB's latest Housing Confidence Survey features an unusual mix of opinions with a big jump in the number of people expecting interest rates to keep falling, and a big drop in the number expecting house prices to rise.
And people were relatively evenly split on whether or not it's a good time to buy a house.
A net 20% of survey respondents were expecting interest rates to keep declining, up from a net 1% in the last quarter's survey.
That's hardly a surprise - the fall in interest rates has been long anticipated.
ASB's economists said the last time this many respondents were picking interest rate falls was in the third quarter of 2020, when the Reserve Bank was contemplating negative interest rates.
However, only a net 13% of respondents expect house prices to keep rising, a sharp drop from the net 40% that were expecting them to keep rising in the previous quarter's report.
All regions saw a decline in the number of people expecting continuing price increases, although South Islanders were more optimistic about price rises than North Islanders.
"The drop in house price expectations aligns with recent data showing that house prices have been falling for the last three months (seasonally adjusted). This survey is about people‘s expectations in 12 months' time, however, it might reflect the tendency for people to base their opinions on the most recent information," ASB's economists said.
However, just a net 8% of respondents thought it was a good time to buy a home, up modestly from a net 2% in the previous quarter.
That contrasts with the large majority - a net 47% - who thought it was neither a good nor a bad time to buy, down from a net 55% in the previous survey.
"The housing market lost momentum over much of 2024," ASB's economists said.
"Plentiful stock is favouring buyers while relatively high interest rates and slower net migration remain broader headwinds to activity.
"Data from the Real Estate Institute of New Zealand shows that house sales in the three months to July decreased by 8.6% (seasonally adjusted, compared to the preceding three months). House prices declined over the same period."
"We expect sentiment to shift further towards it being a good time to buy as house prices are not likely rebound quickly, while listings remain plentiful, and interest rates are likely to decline further," ASB says.
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61 Comments
If people's jobs are potentially at risk, or there is a sense it may be at risk, then it is unlikely house prices will increase.
Case in point: If I know there is a good chance of me losing my job in the next 12 months, even a 1% interest rate wouldn't make me want to buy a house for any purpose.
Mr Frank.....are you out there looking for a new job if this is the case? Is it plausible that you may find another job in that time, given the certainty around you potentially losing your job? Or are you waiting to be let go before you start looking?
Depends what industry someone works in. It may be easier for someone working as a financial accountant or legal counsel with a mid-to-large company to have a relatively stable job in this climate.
For those working in frontline hospitality, retail or construction, it is tough to feel secure about your job (new or old) unless the economy/industry recovers from its current slump. FYI those among the largest sectors in NZ by employment and generally operate on razor-thin margins requiring high sales throughput to thrive/survive.
How does one afford a house working in hospitality or retail?
If people's jobs are at risk do they not rent also? Accomodation cost are not avoidable unless you can live with family. Arguably owning a home can provide more flexibility if you lose your job with banks generally willing to provide different forms of support rather than a landlord evicting you on the street...
what a load of tosh
the strongest position to be in right now is either:
freehold home owner with diversified income streams or
renting on a periodic tenancy... with the flexibility to move towns for work, or in with family or friends
having a big mortgage is a noose... the bank might loosen it for a while with a mortgage holiday, but will eventually tighten it until you can hardly breathe when you find a new job... or HANG YOU if you can't
Two loads of tosh. I know of young people with mortgages and they feel like they are imprisoned in their own home. They can't take new jobs in other cities, some watching their mates doing well in Aus. And they are stuck in an overpriced declining asset.
It's tragic to see some of our most productive like this. Meanwhile their next door neighbour sloths on the couch with the 5 kids and welfare pays all.
What an economic and social mess we have created.
And one of the culprits knighted himself.
Herself
Owning a home has it's limitations as well. I have colleagues in the same boat, watching their friends work abroad and travel the world every year. The flipside is that once they have paid down their mortgage, they can either rent and move, sell and move cities or towns, and likely have more financial stability when they are older, although naturally this isn't guaranteed. I'm sure everyone would love to travel every year, plumb in and out of jobs for years and keep everything new and exciting, but it is discipline that breeds success in life, especially when considering planning for retirement.
Short term sacrifice, long term reward..
Watch those friends come back from overseas complaining about being even further locked out of the market...
It varies. I returned from a few years in the 3rd world with money sufficient to pay of my London mortgage. Currency fluctuations are far more significant than mortgage interest rates.
"Watch those friends come back from overseas complaining about being even further locked out of the market..."
You mean all those people coming back from overseas where housing has consumed less of their earnings and they've been paid better for the work they do?
Those people, right?
watching their friends work abroad and travel the world every year.
These people... the ones that earn more/ spend more, with little to show when they return.
Better to enjoy a life well lived when you are young and healthy than to be stuck under the debt of an overpriced home.
YOLO until you're stuck on the Dole-O
"Better to enjoy a life well lived when you are young"
Until they get to the second half of their life (when they won't have as much energy to commit to work) and begin to start reaping the fruits of their "bad" financial decisions made while they were young.
Pretty sure you have no children of your own if you think being at home with 5 of them involves slothing on the couch. Or if you do have kids - institutions are bringing them up. Nor have you been on a benefit and understand the plethora of tasks you are required to undertake if you are on a benefit; not to mention its a full time job just to get in touch with them if you need to.
If you rent & have your own children, it's not as easy to simply move in with other friends & family.
If you own your property - you can always sell, rent it out, get boarders etc...
Owning a property is not as scary as you make it sound... plan ahead & buy well.
If you own your property - you can always sell, rent it out, get boarders etc...
You're full of shit.
Try getting a boarder into you FHB entry level 2 bed shitbox, hey want to live with us? The kids and us will cram into one room and you can have the other, sounds great.
You can sell and crystalise the loss of your deposit
Renting it out, while having to top up the mortgage and also pay for the rent in your new place.
You either come from a very privileged background, are old or are f****ng clueless as to the challenges the young in NZ are facing with regards to housing.
Were we talking about a 2 bedroom shitbox with a family that have multiple children?
Sounds pretty specific, personal experience?
Calm down. That’s utterly uncalled for.
""If you rent & have your own children,.."" this is prejudice against step-children and foster children.
Omg...
Yay, for Blackrock!
Tony Alexander says they will. That's what I like to hear.
https://www.oneroof.co.nz/news/tony-alexander-how-long-have-buyers-got-…
From the same article;
"Because supply is increasing. A net 50% of agents have reported that they are receiving more requests for property appraisals. This is up from just 3% two months ago and the strongest result since February’s net 61%. More people are looking to sell now"
It's not rocket science that any hint or rumour of increased buyer interest, sellers who'd held off for perceived better conditions, will return in force. I think indications point to a buyers market continuing and therefore remaining under price pressure over summer.
Pro property pros need regular reminding this is an economy with increasing jobless and business liquidations.
Alexander says the upward momentum has strengthened.
Alexander sys the upward momentum has strengthened.
Yes he did say this. In face of an increase in listings, it will be more telling if there is a corresponding increase in sales throughput that translate into a sustainable floor and eventually rising prices. Rising of prices exceeding the prevailing inflation rate is another story altogether.
Still waiting to hear from you how prices can increase? Mass immigration of people with big pockets of cash or massive inflation?
Or do you have another theory?
Rastus, sorry - I wasn't aware you were waiting. I think it will be many years before house prices once again outperform inflation - possibly not till after 2030. In the interim, I think over time as house prices underperform by various measures, eventually a floor will come. This being on the proviso wages still increase, the employment situation starts improving in the second quarter 2025 and our export sector is supported by a global soft landing. As you can see there are a lot of proviso's in there and a lot can derail the journey. Spring 2025 for prices to stop falling is a very optimistic forecast and I base this on my reluctant acceptance our economy remaining very housing centric plagued by poor productivity and there being no global shocks.
..that was for Wingman. Anyone else who is spruiking can feel free to answer.
I on the same page as rational people like yourself. A balloon needs air to inflate...where do the spruikers think this air will come from?
@rastus I am a spruiker and have been since 2011. Should interest rates come down to 5% or 5.5% my older properties will start washing there face again. In the next 5 years i will sell a property with the most equity and pay down other property the overall result will be small mortgages paying themselves down, The real money maker is....... should property rise with 2 - 5% on average per year things will look good in 10/20 years. PS the air ? Normal migration and population growth - NZ is a lovely place to live
It's quite simple, interest rates are falling, which means Joe Bloggs can service a bigger mortgage, which means immediate upward (or reduced downward) pressure on house prices. Rising this year!
Oh dear.
Falling interest rates are due to a very sick economy. As are falling oil prices for the global economy.
A shack in Wanganui occupied by gangsters will not be immune or become the chosen asset class due to a few decimal points in interest rates..
The formulae of yesteryear is obsolete on todays market. Where does the new cash come from to inflate or even maintain the balloon? Air is escaping in nearly every corner of the market/globe. Fake markets inflated by fake stimulus - not inflated by increased productivity. So they deflate.
NZ is a lovely place for some of us. Terrible for an increasing amount of others.
Normal popn and immigration. Like the success of the last 10 years? Save us.
The number of consented new homes has dropped 25% from last year.
That will put upward pressure on existing properties. Spruikers ahoy!!!
PS...anyone going to the home show tomorrow? Should be good.
Home show .....expect it to be like morgue.
Crashing housing markets, as we are now halfway into, are a bit of a turn off, for splurging on new dunny or shower fitting.
I'll let you know.
I expect reallllllly objective narratives from the Home Show.......from the property hawker......
I expect copy and paste like the other highly self vested interests, like the ole property rat - Tony Alexandra.
I think it is pretty well a forgone conclusion that prices will fall while there is a large overhang of stock to clear. Is there any market that does not fall in that case?
Some logic to TA's prices rising given the 'get a mortgage and pay around 2x of what the ticket price is' common practice ...a bit like buying a car on hire purchase really except car buyers cant claw back the purchase and cost of credit price because theres a constant over supply / wear and tear / wof/cof that drags it all down which means that most cars end up in the junkyard....not so for houses....lol Cheap credit doesnt alter much in the RE game folk tend to think they own it before its paid off and its beyond me why prospective buyers dont hammer them on the price due to the fact that theres still an outstanding on the mortgage. Folk are not so keen on buying cars that havent been paid off fully ....essentially folk are thick as planks...so yep eventually it will return to fantasy land ...maybe... Wonder what the market would look like if you had to comply with the initial terms of your mortgage and couldnt offer for sale until you had fully cleared the title ... TA has a problem presently though and that is the cost of living is diverting folks attention away from playing monopoly...lol
House prices will rise, but very slowly.
It’s called the cycle.
the water start to warm up, but long way to bubbling, that's my opinion.
It’s been bubbling for 20 years to the point the it may have boiled over on the stove with people cheering on for even hotter water.
Not long ago, many a Cafe was buzzing with professionals sharing their own unique advice on how to burn it.
How are local councils inflating property values and rates in Texas:
https://m.youtube.com/watch?v=RZK2a8e9gqA
Is something similar happening in NZ?!!!
Link to the report here: https://www.asb.co.nz/documents/economic-research/housing-confidence.ht…
In reading it I went looking for any comment on 'supply'. The word is present just twice.
And never in any forward looking way. Nor as a continuity - i.e. as a factor has changed significantly since 2016 that will separate the last 30 years from the next 30 years - only as a 'current' factor hidden among many other current factors which are economy wide rather than housing supply specifically.
Maybe the reason why Aucklanders are far less keen to rush out and buy is because what I've has been saying is getting through? One hopes purchasers are factoring this change in and aren't banking on the massive and unsustainable capital gains we've seen over the last 30 years.
New vehicle registrations in NZ in July were up 53% on July last year.
What happened to the great kiwi poverty cycle?
New Zealand recorded 9,430 new vehicle registrations in July, marking a 21 per cent decline compared to 2023 and a 23 per cent drop from 2022.
NZ New Car Market Stabilises in July 2024 - AfMA
Yours....
Correct, but up 53% in July...right?
In a more truly free market with fewer restrictions, anything that might lead to an increase in demand like lower interest rates, would see supply increase to meet that demand therefore there would be no price increases due to supply/demand monopolistic imbalances.
We don't have a less restrictive market yet in NZ, BUT the government has clearly signaled that they will free up the land supply.
These policies and their effect have not moved through the system yet, but when they do, there's plenty of scope for raw development land prices to fall.
Landbanking prices have not been affected yet.
When did anything like that happen in NZ?......Never.
It'll take years to get the legislation through, and even if they do it, who would sell for a pittance? There's hundreds of acres ready to go in Riverhead but the local Council have nixed it.
Getting a resource consent through for a subdivision can take years and cost millions.
It used to be the norm. pre-1995. And been there and done that.
This present Coalition government is the only one since 1995 that has said they will remove restrictions and have started to.
And you need to read up on how the free market works. Land sells every day in NZ in the rural farm market which is mainly operating as a free market, ie selling at its economic worth free from any non-valued added add-ons.
Yes, councils need to get out of the way, and that is part of Govt. policy to make that happen and if they are made too, then anyone holding raw development land that they paid multiples more than its next best rural economic use, will go the same way as any speculator that bought at the top of a boom.
The present govt has been in power for coming up to a year, and absolutely zero has happened to make land cheaper.
There has been a lot of talk though, I'll give you that.
By the time they discuss urban form, open space, natural character, landscape, sustainability, transportation, stormwater, ecology, natural hazards, contamination, drainage, heritage and archeology, cultural values and deal with endless procrastination and objections from local maoris, it'll be years away.
Deciding to buy or sell a home is only half the trade...
The more important question is, where is the best place to store capital? Is it a good time to be in cash with a guaranteed 5-8% loss in purchasing power each year and a chance of losing much more in a banking crisis or hyperinflation event. Is it a good time to be in stocks? bonds?
Pointing out the risks of being invested in property without balancing that with the risks of being in the alternatives is disingenuous. It's comparable to saying NZ is slowing down so you should be short the NZD without considering the challenges facing the USD or EUR.
I've been around for a long time, and there's not many better investments than buying a house in a good area, improving it, paying off the mortgage as fast as possible...and you get to live in it. Do the homework.
And it's tax free....
I've dabbled in stocks, bonds, real estate, fixed interest, you name it. But RE is great if get it right.
And it's tax free....
for now... the writing is on the wall
Neither National nor Labour will do it, they'll never win an election based on more taxes.
If it's such a terrific perk, why you aren't you out there taking advantage of it? Taxes in this country are extortionate already.
I am to a degree, but I still disagree with it, and it would be delusional to think that gravy train will roll on forever.
There's a growing population that this setup doesn't work for.. they vote. And believe it or not some people would happily pay more on taxes to better fund those services that we all complain about.
The Green wave is growing, main parties will have to shift if they want to claw back those votes.
I believe in cleaning the planet up...and we are..very slowly.
But every 'green' legislation is adding to the cost of housing.
Building better houses perhaps.
The main driver imo is the ingrained idea that house prices must go up, a self-fulfilling prophecy
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