There is considerable uncertainty in the housing market and the majority of people expect mortgage interest rates to rise, according to the latest ASB Housing Confidence Survey.
The survey for the second quarter of this year found that 48% of people of people expected house prices to rise, up from 46% in the first quarter of this year, while 26% expected them to remain the same (27% in Q1) and 15% didn't know, which was unchanged from the first quarter.
However, there were substantial regional variations, with Aucklanders the most pessimistic on price and Cantabrians the most optimistic.
There was a greater variety of opinions about the direction of interest rates, with 37% of people expecting them to rise over the coming year, down from 38% in the first quarter, 32% expected them to stay the same, 26% didn't know and just 4% expect them to fall, down from 6% in the first quarter.
Interest rate expectations were much more uniform across the country than house price expectations.
"The still subdued house price expectations suggest that ongoing uncertainty in the housing market is fuelling caution about market prospects," ASB's economists said in their commentary on the survey results.
"While election-related uncertainty has subsided, the outlook for the housing market is murky.
"Competing influences of strong population growth, limited supply, legislation uncertainty and affordability constraints have subdued market activity and prices.
That is showing up in whether people thought it was a good or bad time to buy, with 19% of survey respondents saying it was a bad time to buy and just 14% saying it was a good time, 52% saying it was neither good nor bad and 15% didn't know.
Canterbury was the only region of the country where a majority of respondents thought it was a good time to buy.
You can receive all of our property articles automatically by subscribing to our free email Property Newsletter. This will deliver all of our property-related articles, including auction results and interest rate updates, directly to your in-box 3-5 times a week. We don't share your details with third parties and you can unsubscribe at any time. To subscribe just click on this link, scroll down to "Property email newsletter" and enter your email address.
19 Comments
It is always a good time to buy in Christchurch.
Great lifestyle and opportunity to own for less than renting.
Buy right and you won’t look back.
Interest rates are going nowhere for a long time.
Investors fill your boots in ChCh if the no.s add up and you can see upside!
The Auckland housing market is definitely a lot worse than murky. If you think you're clever spending $1.2M back in 2009 for a house that has a CV of $2.5M in 2017 you are WRONG. You'll struggle to find an offer of 900k from now on. These houses are overinflated, overpriced, overhyped, overrated and oversold by the RE's with no business ethics. Your inflated $2.5M asset will slide downwards to around 750k in the next few years and you'll be pinching yourself, wondering if you've just waken up from a sweet dream turned nightmare.
Auckland has hit its limit, all the pressure is pointing to price declines.
Lets take a look at some of them
Foreign buyers - now banned
immigration - falling
Building Consents - going up
Inventories - high
Sales - very low
Days to sell - high
access to finance - tightening
inflation - regional fuel tax will impact even if not shown in official numbers
Wage increases - minimal
House Prices - already flat to falling
Low interest rates are all thats propping things up at the moment, and that wont be enough.
I agree with most of that except immigration. The coalition has done squat to reduce arrivals as promised, which are still running on record highs. Much of the net migration drop has come from sharp rises in departures, courtesy of National party's introduction of wage thresholds on residence and essential skills visa applications.
Departure numbers have picked mainly among Asians, most of whom are believed to have first arrived as students but could not gain residency or work permits due to new restrictions in place. These people were less likely to buy houses in Auckland as their salaries were to low and their fate in NZ dicey to begin with.
Unless we see sharper drops in work visas (240k arrivals and renewals last year) and residence permits (45k issued last year), the impact of immigration will not be felt on house prices.
Not talking about Auckland Nymad!
Fundamentals are right just now to be buying if you are buying positively!
Lady on the A.M. program this morning said the same thing!
Only poor investors close the door on buying opportunities!
7% returns on rental income plus potential gains on paper to leverage to buy more positively geared property seems a pretty good option when shares are so volatile and Fixed Interest is not worth the time!
It is not murky, it is mixed.
We have low interest rates locked in, but the only potential borrowers are NZers and Aussies (no foreigners). These people have less capital and earn less than foreigners, so can borrow less. All this means mortgage and therefore property values are effectively capped to a lower amount. Figure the median mortgage cap is somewhere in the $500,000-$600,000 dollar range, on a 20% deposit this means a capped medium value of $600,000 - $750,000.
Boom time - in places where prices are lower than $600,000.
Bust time - in places where prices are higher than $750,000.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.