Most New Zealanders think now is a good time to buy housing because prices have started to rise again and interest rates seem planted at low levels. But Aucklanders don't share this view due to the affordability crisis in their region.
Nationwide housing confidence remained steady as price expectations approached record levels in the three months to October, according to the latest ASB Housing Confidence Survey.
Expectations of further increases in house prices are becoming firmly embedded with a net 56% of respondents now expecting prices to rise over the next 12 months. This is approaching the record level last set in March 2003 of 60%. (The lowest level was -55% in June 2008.)
"Price expectations remain highest in Auckland and Canterbury where supply is tightest," said Nick Tuffley, ASB chief economist who released the survey. "However housing confidence outside of the two main centres is climbing suggesting that market buoyancy is spreading throughout the regions."
In contrast to the nationwide overall rise in the Index, Auckland housing confidence has been falling steadily over 2012, and is now down to just 8%, while the rest of the country has been showing increased confidence that now is a good time to buy.
"Levels of new listings and housing inventory have remained low in the region, and clearly that is making it difficult from a buyer’s perspective," said Tuffley.
In other areas, supply is not so tight (although inventory is falling) and so the market is less tilted in favour of sellers.
ASB says housing demand is unlikely to drop off, with intensifying expectation that interest rates will remain at low levels according to the latest survey. Over 40% of respondents expect interest rates to remain on hold over the next 12 months, the highest proportion since 1999.
"The broadening belief that interest rates will remain low could further fuel interest in entering the market," said Tuffley.
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