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Fewer people are expecting house price increases

People still don’t think it is a good time to be buying a house, but sentiment towards the buying a place is improving. The improvement in sentiment, which is detailed in the latest ASB Bank housing confidence survey, has been put down to a relatively positive March for the property market and "competitive

Sunday, April 30th 2006, 12:00AM

by The Landlord

activity amongst mortgage providers."

A net negative 3% now think it's a bad time to buy a house, up from a net minus 13% three months ago.

While sentiment has improved the outlook for price appreciation hasn’t. Expectations that house prices will keep increasing have eased markedly from 18% to 1%.Buying sentiment is most negative in the South Island and most positive in Auckland, the survey found.

In Auckland, a net 3% of people think now is a good time to buy a house, although a net zero are expecting further price increases, while a net 10% in the South Island think now is a bad time to buy a house and a net 2% are expecting house prices to decline.

Another significant finding in the survey is that fewer people are expecting higher interest rates with a net 36% expecting higher rates compared to a net 67% three months ago.

Home loan rates have been falling all year. For instance ASB's two-year fixed rate has declined from 8.30% to 7.70% - however, as detailed by www.goodreturns.co.nz, ASB along with other banks have increased rates today by around 20 basis points.

The decline in the number of people expecting higher interest rates isn't surprising either - both in early March and late April, the Reserve Bank has said it doesn't expect to raise rates again in the current cycle.

Nevertheless, the majority of mortgage holders are on fixed rate loans and many will be rolling off existing fixed rates and facing significantly higher rates to re-fix through 2006.

ASB says the general economic slowdown currently underway both reduces household income growth and the capacity of people to take on increased debt and therefore reduces people's willingness to spend.

"It is clear we have entered a period when house price gains are less likely, certainly not at the levels seen in recent years, and it could be several years before average prices gain a strong upward momentum again," ASB chief economist Anthony Byett says.

« Property investors refocus on cash flowHomes become more affordable: survey »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.29 ▼2.59 ▼2.65
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
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 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
HSBC Special - 1.99 - -
Lender Flt 1yr 2yr 3yr
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 2.79 2.79 3.15
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.29 2.29 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.79 2.99 2.80

Last updated: 26 February 2021 11:27am

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