The prospect of a further slowdown in the housing market seems unlikely judging by the latest housing confidence survey.
Sunday, November 5th 2006, 12:00AM
by The Landlord
In the latest survey confidence is up and there is growing expectation that further house prices are coming.
For the first time since 2003 the measure of people who believe it is a good time to buy remained in positive territory for two consecutive quarters, rising 1% to a net 6%, the latest quarterly ASB Housing Confidence survey shows.
There has been a consistent increase in sentiment throughout 2006 – in January 2006 the housing confidence measure was at a net -13%.
New Zealanders’ national psyche of home ownership and faith in bricks and mortar seem to drive continued confidence, despite underlying economic fundamentals that suggest any slowdown should be more significant. Factors continuing to drive this confidence include having more time to consider a purchase and less upward price pressure.
Confidence is also reflected in the jump up in expectations of further house price increases, with a big 13% uplift to a net 20%. At the start of 2006 only a net 1% of respondents expected house prices to increase – the figure for the third quarter reflects an optimism which is borne out in house sales statistics, including a steady rise in median house sale prices.
While current confidence in house price increases is still below the average since the survey began in 1996, it seems likely that the traditional spring burst in housing activity will continue to drive confidence in housing up through the remainder of 2006.
The expectation of further interest rate increases remained static at a net 41%. The survey was carried out before the Reserve Bank announcement on October 26, but the majority of those surveyed still expect further rate increases at some point.
It appears that New Zealanders are more resilient to interest rate changes than their counterparts in Australia and the US, where any change in rates is rapidly reflected in the housing market.
Between New Zealanders’ belief in home ownership, and the high level of competition amongst banks in the mortgage market, it seems that concerns New Zealanders may otherwise have are allayed and the housing market will continue to perform, although at a less hectic pace than was seen over the last few years.
The overall picture continues to be one of better balance between buyers and sellers. People with realistic expectations can generally buy or sell their houses and seem to be doing so in a more relaxed manner than in recent years.
It is important to remember, though, that a flat to small average house price increase still means prices are falling for some properties. As always, it is prudent to take care during the sale and purchase process, giving due consideration to all personal circumstances and commitments, in order not to become a forced seller or overburdened financially.
