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House price rise expectations dwindle

The number of people expecting house prices to rise over the next 12 months dropped significantly during the last quarter, although the number thinking this is a bad time to buy a house held steady at a net 18%.

Monday, May 10th 2004, 7:32AM

by Jenny Ruth

ASB Bank’s latest survey found a net 12% are expecting house prices will rise in the three months ended April, down from an average net 50% through 2003.

A net 58% expect interest rates will rise, up from 56% three months earlier.

ASB Bank chief economist Anthony Byett says the survey results are a reminder of the cyclical nature of housing.

He notes that the Reserve Bank has already started raising interest rates and that net immigration is slowing. The central bank has raised its official cash rate twice from 5% to 5.5% since late January.

"These factors, plus the survey results, suggest that the housing market may be peaking," Byett says.

"The moderate nature of both the expected interest rate increase and the migration slowdown indicate that the average house price could flatten over the next two to three years rather than decline sharply."

We could be in for a repeat of the 1998 to 2000 period or a possibly slightly stronger one, he says.

The next few months should provide a clearer picture. "The findings of the survey and other information in the market show that people feel that the time for a good opportunity has long passed. What we aren’t seeing yet, however, is a cessation in buying houses."

Housing confidence starting turning negative from August last year but the latest Real Estate Institute figures show the national median house price struck a new record at $240,500 in March and the number of houses sold that month leapt to 11,371 from 9,940 in February and from the 10,747 houses sold in March last year.

"There’s still an inflow of people into New Zealand and we still have quite low interest rates, even though they’ve be raised twice. Maybe we’re seeing the last burst of activity before it tails off," Byett says.

Those in Auckland thinking it’s a bad time to buy a house totaled a net 14% with a net 9% expecing rising house prices compared with a net 13% for the rest of the North Island thinking it’s a bad time to buy a house while a net 15% are expecting house prices to rise.

South Islanders were considerably more pessimistic with a net 29% thinking it’s a bad time to buy a house and a net 10% expecting further house price increases.

Byett says the bank’s last housing confidence report noted that some of the greatest price gains had been recorded in the South Island "which reinforces why more caution is being displayed in this region than anywhere else."

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 ▼3.19 ▼3.49
SBS Bank Special - 2.79 ▼2.69 ▼2.99
The Co-operative Bank - Owner Occ 4.40 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 ▼2.65 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

Last updated: 3 July 2020 8:15am

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