A brighter note for housing confidence
There is a glimmer of hope for the housing market, with confidence lifting in all regions for the first time since January 1999.
Monday, November 27th 2000, 7:18AM
by Paul McBeth
There is a glimmer of hope for the housing market, with confidence lifting in all regions for the first time since January 1999.
The latest ASB Bank survey of housing confidence, for the three months to October, came up with a net 34 per cent of people nationally who thought it was a good time to buy. That compares with a net 28 per cent for the July quarter.
ASB Bank economist Rozanna Wozniak said that the usual spring sales increase had been slow to surface this year and turnover was still weak. However, looking at recent house price data, she said that there was no reason for a significant further decline.
"The near term outlook is for relatively stable prices," Wozniak said. "The challenge will come in sorting out a few issues before winter."
"The building industry is facing increasing cost pressures, but at the same time the slowdown in activity will reduce the effect of oversupply.
"Confidence in the economy should gradually improve as the domestic sector sees some trickle-down benefits from the growing export sector, while interest rate concerns should reduce during the second half of next year."
Other key points from the survey:
- Confidence in Wellington continues to lag. Net confidence rose from 7 per cent in July to 16 per cent, but that's still well below the 31-41 per cent range for other regions. Wozniak said that significant price rises had eroded affordability in the Wellington region and there was a growing belief that these price rises wouldn't continue.
- While house prices moved lower in the September quarter, the rate of decline looks to be slowing. "Our belief is that the market has been stagnating, rather than continuing to deteriorate," Wozniak said.
- Dwelling consents have fallen sharply, down 33 per cent nationally during the September quarter (compared with the same quarter last year). Although there's less building going on, excess supply from previous building is still dampening house prices.
- Interest rates are close to their peak, with Wozniak tipping further modest rate rises in spite of a soft economy. "As we move into the second half of next year, inflation concerns are expected to reduce. We believe that it will become clear that any increase in underlying inflationary pressures will be both modest and temporary, opening the way for the Official Cash Rate to edge lower around late 2001."