by The Landlord
Most people expect the Reserve Bank to hike interest rates again and that has helped price expectations decline despite more believing now is a good time to buy, ASB chief economist Nick Tuffley said.
He said there was a good prospect house prices would fall, albeit modestly.
"There is a myth in that house prices do not fall in New Zealand, but in reality the Quotable Value statistics indicate there were price declines in each of 1991, 1998 and 2000,"
"Nevertheless, we expect any house price declines this year to be modest."
Optimism over house prices have continued to fall noticeably, he said.
Those expecting higher prices has decreased from 36 percent in the last survey to 29 percent, while 28 percent say they are expecting lower prices (up from 24 percent in the previous quarter).
Only a net 1 percent now expect house prices to increase over the next 12 months, down from 12 percent in the previous survey.
That's the lowest tally since April 2006.
"Certainly the evidence points towards a softening housing market," Tuffley said.
Expectations of higher interest rates were relatively stable with 55% of respondents expecting higher interest rates and only 8 percent expecting rates to fall.
"Despite most respondents expecting interest rates to rise and confidence in the housing market continuing to fall, it's interesting to note the increase in those who see now as a good time to buy," Tuffley said.
While 27% believe it is a good time to buy (up from 19%), this sentiment is now matched by another 27% who believe the opposite. The zero net balance contrasts with the net 18% in the October 2007 quarter who thought it was a bad time to buy.
The swinging pendulum in the housing market is also starting to be reflected in waning construction intentions. The number of residences receiving building consent has begun to drop after a moderate pick up in activity in mid 2007, Tuffley said.
Generally, there is about a three to six-month lag from sales activity to dwelling consent issuance. However, the emerging downward trend in building consents suggests softer times for housing construction ahead.
Tuffley said the housing market was likely to come under further pressure this year.
The national median house price has been flat for the past nine months but recent prices have edged lower, he said.
The median number of days to sell a house also continues to rise, with 49 days being recorded in January 2008, compared to 38 in January 2007.
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