by The Landlord
ASB Bank's latest housing confidence survey found a net 18% of those surveyed expect house prices will continue to rise. While that's down on the net 30% in the last survey, it's still above the level recorded at the same time a year ago.
"What was surprising to me is how many people still expect house prices to rise," says ASB Bank chief economist Anthony Byett.Nevertheless, that outcome is consistent with the messages provided by housing market statistics by the Real Estate Institute and Quotable Value, he says.
For instance, the number of days it takes to sell a house on average remains at historically low levels, real estate agencies are still reporting a shortage of houses available for sale and the latest QV figures showed the national average house price rose 15.8% in the year ended December.
The ASB survey's other findings are more consistent with a cooling market. A net 13% of people now think it's a bad time to buy a house, up from a net 5% three months ago, and a net 67% of people are expecting interest rates to rise, up from 51% three months ago.
But Byett notes that expectations of further rate hikes dissipated over the quarter - although the ASB Bank reports its findings on a quarterly basis only, it surveys are conducted each month.
"People's expectations of higher interest rates actually went down in January," he says. The Reserve Bank has raised its official cash rate (OCR) nine times to 7.25% since the beginning of 2004 but left the OCR unchanged at its last review on January 26.
Byett says it may be that people had picked up on the fact that the banks have been lowering their fixed-term mortgage rates through January.
Byett attributes the continuing strength of the housing market to both the low rate of unemployment - the rate is at a record low 3.4% -- and the strong growth in household incomes. The latter will have risen about 6% or 7% in the year ending March compared to more normal growth of about 5%, he says.
The survey also shows a sharp diversion of opinion between North and South: a net17% of Aucklanders and a net 25% of those in the rest of the North Island are expecting house price rises while only 6% of South Islanders are.
Byett says that could merely reflect the greater conservatism of South Islanders, or possibly the fact that a greater proportion of the southern work force is dependent on exports or just that regions such as Queenstown and Nelson peaked early and flattened some time ago.
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