Housing confidence continues to fall as New Zealanders see
now as a bad time to buy, the latest ASB housing confidence
Released this morning, the survey identified, as expected,
housing pressures were the most intense in Auckland and
Elsewhere, home buyers were more relaxed.
In Auckland, a net -20% regarded now as a good time to buy a
house, 60% believed house prices would increase in the next
12 months and 49% thought interest rates would increase.
In Canterbury, a net -12% believed it was a good time to buy,
60% thought house prices would rise and 53% said interest
rates would increase.
The rest of the South Island was a bit more positive.
A net 10% of people surveyed believed it was a good time to
buy, 49% believed house prices would rise and 55% thought
interest rates would increase.
The New Zealand total was a net -5% believing it was a good
time to buy a house, compared with 0% in July.
ASB chief economist Nick Tuffley said price expectations
remained unchanged in the three months to October from the
''House-price expectations have remained steady around
current levels over the past year, with price expectations
the highest in Auckland and Canterbury - where the market is
The Reserve Bank's high loan-to-value (LVR) restrictions came
into force on October 1.
The ASB monthly results showed a slight dip in house-price
expectations in October, but the magnitude of decline was
within the range of typical monthly volatility in the survey.
As a result, Mr Tuffley was reluctant to make a strong
conclusion from the movement.
A breakdown of the net quarterly figure on house prices
showed 62% expected higher prices and only 6% expected prices
to fall, the difference being the net 56%; 18% expected the
same; 15% did not know.
Interest-rate expectations lifted over the three months, with
a net 52% expecting interest rates to increase over the next
12 months compared with a net 39% three months ago.
Mr Tuffley said the largest shift in the breakdown was an
increase in the number expecting rates to go up - 55%
compared with 44%.
A fall in the number expecting interest rates to remain
unchanged - 20% from 27% - also contributed.
There was a slight North-South split on interest-rate
expectations, with fewer in Auckland expecting higher
interest rates - ''perhaps wishful thinking on account of
their larger mortgages'' - while those in the South Island
were more convinced of imminent rate hikes, he said.
The Auckland market remained tight but there were some
tentative signs pressures might be stabilising in Canterbury,
Mr Tuffley said.
The rate of house-price rise in Canterbury had slowed
slightly and the median of days to sell had edged higher - an
indication the market had become slightly less frantic.
However, the region's fundamental supply issues remained,
with rents up 13% on year-ago levels, he said.
The stronger rental growth versus house-price growth might
reflect new arrivals to Canterbury seeking to rent initially.
A similar dynamic was evident in Auckland in the wake of the
earthquakes as some Cantabrians relocated, with Auckland
rents lifting initially and housing market activity
increasing six months later.
In Auckland, while new listings had started to rise, they
remained at low levels compared with the previous housing
boom. The increase in migration into Auckland had added to
''While housing market pressure remains intense, conditions
are starting to subtly shift.''
The Reserve Bank's restrictions would lock a subset of buyers
out of the housing market and reduce demand at the margin, Mr
At the same time, the Reserve Bank's more hawkish monetary
policy outlook had seen market expectations of rate increases
rise and some fixed-term mortgage rates had also increased.
The combination of higher interest rates and increased
construction of new housing should see some of the pressures
gradually come out of the housing market, he said.