by Jenny Ruth
The survey shows a marked turnaround from the September quarter when a net 2% thought it was a good time to buy a house.
"The quirky thing about the survey is that even more people think house prices are going to go up in the next 12 months," says Anthony Byett, ASB's chief economist. In the September survey, a net 42% thought house prices would keep rising.
Nevertheless, Byett sees expectations of price increases can prove fickle. "The past is not necessarily a good predictor of the future and it is well known that in other housing cycles, false expectations exist at the end of the housing cycle."
The latest survey also shows a dramatic turnaround in interest rate expectations: a net 47% now expect interest rates will rise this year, up from only 5% in the September quarter survey.
Byett also notes that house price increases have already well outstripped rent and income increases and that investment appears to be playing a growing role in the market with expectations of capital gains likely the main driver.
"This suggests a riskier environment, a sentiment that is being more widely acknowledged by people in the survey."
The results suggest a potential cyclical slowdown or even a downturn over a tow to three year period and it's time to be cautious, he says.
Nevertheless, "I'm not unduly pessimistic. Migration is falling away, but we're still going to have a net influx of people and we will still have reasonable economic growth as well. I suspect we will get away with a shallow downturn," Byett says.
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