Housing confidence still upbeat

New Zealand housing confidence is still upbeat even if it's somewhat tarnished, according to ASB economists.

Tuesday, February 23rd 2010, 12:38PM

by The Landlord

A net 37% of respondents to the ASB Housing Confidence survey agreed it was a good time to buy a house in the three months ended January 31, compared to a net 48% in the three months through October. Some 50% were positive, compared to 59% in the previous period, and 13% were negative compared to 11%.

"Respondents are firmly optimistic on now being a good time to buy," said chief economist Nick Tuffley. "However, that optimism has moderated from the past two quarters' exuberance."

The property market was "patchy" in January according to QV Valuations and economists have talked down the revival in housing with weak sales volumes and low number of mortgage approvals hinting rising prices were off the back of a small turnover of houses.

A net 48% of respondents to the ASB survey expect house prices to increase in the coming year, compared to 40% in October, led by expectations for Auckland house prices.

The national median price rose 7.7% to $350,000 in January from the same month a year earlier, according to REINZ, though it was down 10% from December. The survey found a net 51% of respondents expect interest rates to go up, compared to 35% in the October survey.

Tuffley said "greater consciousness of higher interest rates in the future may be partly behind the moderation in optimism towards housing" with the central bank reaffirming several times its commitment to begin hiking rates in the middle of the year.

Rising unemployment and a softening housing market have given central bank Governor Alan Bollard breathing space to keep the official cash rate lower for longer, and the market pushed out its timeline for rate hikes in New Zealand.

Investors have priced in 157 basis points of hikes to the OCR in the coming 12 months, according to the Overnight Index Swap curve.

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