More signs housing market slowing
ASB Bank’s latest survey of housing confidence suggests that while the housing market is slowing, steep declines in house prices are unlikely.
Monday, November 8th 2004, 5:50AM
by Jenny Ruth
"Unlike during other cycles, the economy continues to grow and no recession is expected."
The survey found a net 7% of the 600 people surveyed think it isn’t a good time to buy a house and that a net 2% think house prices will fall.
However, Byett notes that the most common response (from 41%) to the latter question was that house prices would stay the same.
The responses to both these questions are unchanged from three months ago, but slightly more, 75% expect interest rates to rise further, up from 68% three months ago.
Byett says the latest survey was carried out before the Reserve Bank last raised its official cash rate (OCR) on October 28. The OCR, which directly affect floating mortgage rates, rose from 6.25% to 6.5% and has risen from 5% at the beginning of this year.
The central bank has said further interest rate hikes by not be needed.
"Looking ahead, the survey results suggest a further slowing in activity is likely. Current driving forces in the market, such as higher interest rates, slower population growth and a fast rising number of new dwellings coming on stream, are likely to continue to apply brakes to the market," Byett says.
The survey shows Mainlanders are the most pessimistic followed by Aucklanders. A net 21% of South Islanders think it’s a bad time to buy house and a net 3% expect house prices to fall. A net 8% of Aucklanders think it’s a bad time to buy a house and a net 15% of them are expecting house prices to fall.
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