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Softer market better time to buy

Good news for advisers: softer price growth is starting to improve perceptions of whether it is a bad time to buy a house, a new survey suggests.

Friday, August 25th 2017, 11:46AM

ASB has just released its latest Housing Confidence Survey, which covers the three months to July, and it indicates that most people are well aware of the market slowdown.

The survey shows that 32% of respondents nationally expect house price growth over the next year, as compared to 42% last quarter.

It is Aucklanders who are driving the decline. Just 15% of Auckland respondents now expect house prices to grow – and that level is an eight year low.

For ASB chief economist Nick Tuffley, there’s no doubt the dip in confidence reflects the fact house sales volumes are at the lowest levels since 2014.

“The subdued sales activity has coincided with the market hitting the brakes on house price growth, with prices falling slightly in Auckland and Christchurch.

“In the case of Auckland, this is the first time house prices have fallen since 2010.”

In response to the softening market, people are adjusting their expectations accordingly, he said.

However, it seems that the softer price growth is also starting to affect people’s perceptions of whether it is a bad time to buy a house.

While 25% of survey respondents nationally still think it is a bad time to buy a house, that is an improvement on the 28% who thought it was last quarter.

Those thinking it’s a bad time to buy eased the most in Auckland where a 12% think it’s a bad time to buy down from a 19% last quarter.

Tuffley said Auckland is no longer the most pessimistic region – for the first time since July 2013.

This is likely to reflect the recent softening Auckland house prices, but affordability constraints will limit how “good” people feel about buying a house in Auckland for some time.

The market’s slowdown has been largely laid at the feet of the Reserve Bank’s LVR regime.

Tuffley said they certainly think the second round of LVRs has kicked things up a gear, with the 40% investor threshold making it much harder for some people to buy.

“But interest rate hikes, which occurred around the same time, have also played a part.”

The survey reflects this, with 47% of respondents expecting higher interest rates to come – which is likely to have tempered housing expectations.

Given market conditions are likely to remain soft over the next few quarters, ASB anticipates a greater drop in house price expectations in next quarter’s survey.

Yet Tuffley said that when they step back and take a look at the big picture, it’s still one of very strong demand and limited supply.

“Ultimately that means upward pressure on prices will continue, just not to the same degree we’ve seen.”

Read more:

Stalling market no reason to panic 

Call for LVR reviews as sales plunge 

Tags: ASB financial advisers interest rates LVR Reserve Bank

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 15 November 2019 4:16pm

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