Pessimism is on the rise in ASB's latest Housing Confidence Survey, with more people believing it's a bad time to buy a house than think it's a good time to buy, especially in Auckland.
ASB's latest quarterly survey showed that nationwide, 13% of people thought it was good time to buy a house while 21% said it was a bad time to buy, giving a net 8% who think it's a bad time to buy. Of the remainder, 49% said it was neither good nor bad and 17% didn't know.
And the mood has become more pessimistic since the last survey, when a net 6% of respondents thought it was a bad time to buy a house.
However, the pessimists are much more dominant in Auckland and Canterbury than in the rest of the country, the survey found.
In Auckland, a net 19% of respondents thought now was a bad time to buy a house, compared with a net 15% who were pessimistic in the last survey, while in Canterbury a net 16% thought it was a bad time to buy, unchanged since the last survey.
The pessimism evident in Auckland contrasts with sentiment in the rest of the North Island where the optimists narrowly outnumber the pessimists, with a net 1% believing it's a good time to buy.
But in the rest of the South Island apart from Canterbury the overall mood was pessimistic, with a net 3% of respond nets believing it's a bad time to buy.
The survey also found that a net 56% of respondents believe that house prices will increase in the next 12 months, which was down from 59% in the last survey.
Respondents were most bullish about the prospects for house prices in Auckland, where a net 63% expected them to rise in the next 12 months.
"The results don't point to house price growth intensifying over the next year, but still suggest a decent pace of growth in the near term. It remains a tight market that is difficult for buyers," ASB chief economist Nick Tuffley said.
There was also a big drop in the number of people who believe interest rates will rise in the next 12 months, which declined from 34% in the previous survey to 11% in the current one.
A year ago, a net 70% of respondents thought interest rates would rise in the following 12 months.
Tuffley said much of the recent discussion about a housing bubble had been focused on Auckland , where prices were the most stretched.
"The Auckland market makes up around 39% of national sales. Add in the Canterbury market, which is still fairly tight, and we are talking about more than half of the housing market, based on latest turnover," he said.
"Accordingly, it's hard to dismiss the housing issues as just an Auckland problem."
The combination of strong migration inflows, low interest rates and the confidence shown by respondents in the survey, was supportive of robust demand and price gains in the months ahead, ASB said in its commentary on the survey results.
To read the full survey results. click on the following link:
Housing confidence
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45 Comments
The general quality of the Herald's reporting is disgraceful , I read the Herald and seek second views on issues , then formulate my own opinion based on a more probing report or a contrarian view.
The fact is that falling confidence by the key player in any market is a sure sign that the market is coming to its senses .
If they are hiding money from their Government and building 10million? as the amount needed for overseas "investment" then i suspect no. If they decide to exit then that will either cause a turn or indeed make it worse. problem is how can you figure out the impacts if you dont know how many ppl and how much $. Foreign sellers are not a direct stability issue for us....if they cause a 30% drop overall ie incl FHB properties then that is a problem for all NZers (who pay tax especially)
Re house buyer statistics , surely we can ascertain who is buying property simply by the surname on the title deeds or recent settlements ?
I know it seems overly simplistic, and there will be a bigger than standard margin of error , but it would give some sense as to who is buying up Auckland .
Our Next door neighbour in Greenhithe had an on-site Auction through Harcourts of a high value home a few Sundays ago , and I was the only person at the auction who was not Asian .
We are number 55 at the end of the cul de sac , and there were just five Kiwi families left in the street . Now there are only four left
And at the same time China builds up its military
http://blogs.wsj.com/chinarealtime/2015/05/09/clear-strengths-fuzzy-wea…
http://www.foxnews.com/politics/2015/05/10/china-building-drone-army-us…
Invasions all round??
There is another interesting story in today’s Herald regarding a banking CEO who says there is no bubble but the article ends with his quote which says:
"Current owner occupiers need to be mindful that whilst their house is increasing in value they should be careful about borrowing against the increased equity."
"Right now, I wouldn't buy unless I had to find a place to live. Net property yields are quite low and there are other reasonable yields around that are more liquid than property if investing is what you want to do."
(http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=114…)
It may be a bit too early to call a turn but there is now a lot more noise from concerned people.
It is more interesting that there are more new loaners than new houses and new clients to loan for.
But some people just want a piece of the action, no matter what risk or LVR.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=114…
Read that - these geniuses are happy to lend at 100% LVR. Get a bit of a pullback say 5% (that's just equal to the Auckland price 3 or 4 months ago) add in 5% minimum for sales and marketing and maybe 10% for forced sale status and missed interest payments and you've just lost $200,000 on a 1mil loan.
Of course it's different this time. A new paradigm. Permanent high and rising prices. Auckland is Special. What did that bank fella say "Auckland is one of a handful of very desirable cities around the Pacific Rim and the current prices reflect the fact"
Yeah Right.
To be fair , this irrational exuberance in the Auckland property market was always going to crack at some point . And this is without doubt a hairline crack which could be the start .
Yields are so low that only fools would buy investment properties at these prices , and the general level of prices is totally out of kilter with incomes and ability of ordinary Kiwi families to service this type of debt .
If one understands the very simplest tenets of the psychology of markets , then you can figure out that if a key player in a market ( such as buyers ) loses confidence , then the whole edifice could unravel itself .
Whether it be stock markets , crude oil , tulips , daffodils or property , once the market recognises things are out-of-kilter the key players simply sit on their hands or walk away.
The other thing is that markets can and do , fall , just look at crude oil , from $120 per barrel to around $40 . New supply (in the US ) was the game changer , as well as new finds in West and central Africa , and Madagascar.
Now we have an unprecedented building boom in Auckland , so supply is being sorted out , and that's critical to getting prices back to reality.
And lets face it ,with regards to Auckland , its about time things changed .
Yet, prices in Auckland will continue to rise at double digit rates.
Building costs are skyrocketing, land prices skyrocketing, council compliance costs out of the stratosphere, 10 million chinese are looking to move to auckland - good luck with seeing normal price growth in auckland anytime soon.
Rastus what would you define as a bargain in Auckland? One of my relatives has paid $1.4 million plus for a 1970"s house in Mangere Bridge and the house is in original condition. Was that a bargain? What level of price would it need to drop back to in order for it to be a bargain? The original owners got $1,000,000 out of it when selling it without any renovations or improvements.
....If the rules change and they be allowed to whack up a 10 story apartment block, they be in the money. If Auckland volcanoes wake up, they won't be. Answer is...luck. Everyone whoose made a buck pats themsleves on the back for being supersmart - whereas, they took a position and just got lucky. A story..... prior to the last share market crash relative made a dumb decision and got caught without bridging finance - had to sel his entire share portfolio to cover - he was gutted. But...12 hours later the sharemarket tanked. So he ended up with flash new house, old one sale went through, repurchased sold shares...ended up with flash new home for free! Luck mate.
if you check back you will find Mangere bridge, and the new subdivisons in mangere where hardest hit in 2008/2009 prices corrected by 20-30% , my friends brought down there end of 2009 for a bargin compared to now , wheras my old neighbour only got back what he spent at the peak of 2008 when he sold early this year.
i guess its all in the timing when to get in and when to get out
Is the RBNZ going to drop Negative Gearing via the back-door tomorrow? If it changes the commercial banks' capital lending rules to make them income dependent, then any new lending for rental property will have to make sense to the lending bank in rental income terms. So, no negative gearing will be possible for future property rental lending as if the rent doesn't match the interest amount payable of the borrowing - no money will be lent. Current negative gearers aren't affected, and no future ones will be allowed and anyone with 100% cash will likewise be unaffected - but there will be no interest component for them to claim
How does a young kiwi couple with one earner, children and a massive mortgage sleep at night with all this going down? With the dairy industry struggling, housing is about the only pillar left. If that crumbles Kiwis only have John Keys integrity left to provide confidence. Lately that and 5$ will get you a coffee anywhere in AKL.
We don't sleep mate. We lie awake at night wondering what to do. Do we spend our entire life savings on a run down shack in Papakura to start our family life, only to spend hours a day in horrendous traffic and perhaps lose all our equity in a crash? Or do we sit tight in our rental and start having children anyway - hiding it from our landlord because we know they don't want children ruining their investment...
The saddest fact for me is that New Zealanders just couldn't care less. This country has lost its heart.
A lot of New Zealanders still care.
.
Those that do don't vote for the Nats - right wing ideology is chasing the dollar and putting that before anything else.
If you want this country to change, vote any other party but National, and convince all your family and friends to do the same.
You think Labour and the Greens would make things better. All parties MP's have rental homes so things will never change unless the Reserve Bank intervenes. MP"s are encouraged by their super scheme to get into property . Would an MP ever reduce the level of their perks. Hell no.
Labour? No
.
But the Greens might surprise you.
.
Greens' policies are determined on a democratic principle. That is, if you are a green party member, you get to have a vote on the policies.
No other party in NZ determines their policies like this.
it is one of the fairest parties around.
Don't worry, the revolution is coming. Not reported in MSM in NZ, though.
.
http://www.theguardian.com/uk-news/2015/may/09/anti-austerity-protester…
.
All 'leaders' know that rising inequality is leading to 'social unrest'....
I heard a radio interview on either RadioLive or RadioNZ with Shamubbel Eaqub who now warns that if the current trajectory continues in Auckland House prices, that there will emerge a bifurcation within New Zealand society between an entrenched hereditary landowning class and a mass of rent paying serfs, which will provoke inter-generational resentment, and eventually lead to social unrest. I can't find a recording of his interview, I think my summary is correct.
All the more reason that non-property owning Aucklanders need to leave Auckland. Every time I hear of a 20 or 30-something person/couple taking on these massive debts - I shudder. They are like the victims of the liar loan industry in the US - only ours are not non-recourse loans. It is going to be truly tragic for a generation and their offspring..
http://www.stuff.co.nz/stuff-nation/assignments/share-your-news-and-vie…
People are slowly realising.
Good article but it fails to point out you'll only ever get the second best price when selling by auction. It should also include the benefits of blind negotiating.
Did you know that open homes in the USA often go for half a day...
... I'm never far away !
Hey , our old chum Hugh Pavletich was on the wireless this morning , and he said that house prices in Canterbury are already flattening off , if not actually falling back a % or two .... he reasoned that there's a lot of supply from new housing developments coming onto the market ... will the trickle turn into a flood ?
The Herald doesn't want another visit by a delegation of panicky RE drones so they refuse to print bad news articles about the property market. Obviously interest.co.nz isn't afraid of professional spruikers; at least half the people.who post here are undercover real estate agents and mortgage brokers.
LOL
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