Market mixed on future direction of house prices
Although there’s still a strong expectation that house prices will continue to rise, fewer people think now is a good time to buy a house.
Monday, October 7th 2002, 6:35AM
by Jenny Ruth
It’s a bit of a dichotomy. People’s expectations of house prices are as high as we’ve ever seen them," says the bank’s chief economist, Anthony Byett.
The survey found 45% of respondents believe house prices will increase, down from 54% three months ago. But only 24% believe it’s a good time to buy, down from 35% in the June quarter.
Byett says the key to the connundrum may be interest rate expectations. "Whether or not people think it’s a good time to buy pretty much goes up and down with interest rates going up and down," he says.
The survey found the majority are still expecting interest rates increases, 53%, although that’s down from 71% in the June quarter. Fixed-rate home loans have actually been falling in recent weeks.
The uncertain global economic outlook and heightened tensions in the Middle East may also be making people hesitant, Byett says.
The economic situation and all this sabre-rattling and the possibility of oil prices going up is spooking people," he says.
Nevertheless, conditions in the housing market itself seem positive. As well as interest rates coming down, listings of houses for sale are at low levels compared to demand and houses are taking less and less time to sell, he says.
Net migration remains strongly positive and building activity is strong, but supply is still limited.
The latest figures showed permanent arrivals exceeded departures by 3,100 in August and in the year ended August there was a net inflow of 36,200 people compared with a net outflow of 4,400 in the previous year. Excluding apartments, housing consents in August fell 3.1%, but that was the first decline since February.
ASB’s survey shows the Auckland market is particularly buoyant with 53% of Aucklanders expecting house price increases.
Byett concludes that if the global concerns dissipate, New Zealand could be in for another surge in housing activity. "The situation is ripe for a busy summer in the housing market.
He notes the survey suggests the "rotting homes" problems don’t appear to be affecting housing confidence generally, although certain newer houses will undoubtedly be impacted.
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