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Prices expected to rise but 'not a great time to buy'

House price expectations remain elevated in the latest ASB Housing Confidence Survey but respondents in the country’s biggest cities aren’t convinced now is a good time to buy.

Tuesday, May 13th 2014, 12:00AM

by The Landlord

The survey recorded that a net 48% of respondents expect house prices will keep rising higher in the year ahead.

Although that is slightly below where expectations were sitting at the same time last year, it is still a high reading by historical standards for the survey, which dates back to 1996.

ASB chief economist Nick Tuffley said the New Zealand housing market remained tight, with the level of house listings remaining at extremely low levels by historical standards.

“But the slight easing in price expectations is occurring at a time where we are also observing a slightly lower level of sales. Some respondents are likely expecting some moderation after the price rises recorded over the last year or so, but very few expect prices to fall.”

Expectations of house price gains are still the strongest in Canterbury, although not as bullish as a year earlier.

A net 55% of Cantabrian respondents said they thought house prices would increase. That was over 80% in earlier surveys.

The net percentage of respondents expecting price gains in Auckland was 52%, up from the 48% last quarter but down from 66% a year ago.

For the rest of the North Island, 44% expect gains.

Expectation is also growing for interest rates to keep rising over the next 12 months, with a net 70% of respondents expecting interest rate hikes, as opposed to 55% in the February survey.

“The increase in the Official Cash Rate at the Reserve Bank of New Zealand’s March  meeting was well signalled over the preceding months. However, there is nothing like an actual mortgage rate increase to convince homeowners that rates are rising,” Tuffley said.

“Back in January, a net 51% expected higher interest rates over the coming year. That was quite a high number, but in the April quarter survey that number has jumped to 70%.  The RBNZ continues to signal it expects to deliver further hikes over the next few years.  Borrowers are getting that message loud and clear.”

Sentiment about buying a house has improved over the last three months, but still remains negative, with a net 4% of respondents believing now is a bad time to buy. That’s a small improvement on the net 9% recorded in the February survey.

It was mainly driven by Auckland and Christchurch. which  remain the most pessimistic - cities where the housing market is the tightest.

But the net percentage of Aucklanders who think now is a bad time to buy has moved from -21% to a less negative -10% this quarter.

Canterbury respondents were also less negative, moving from -21% to -14%.

ASB said the change coincided with a slight easing in the tightness of the two markets.

A net 1% thought it was a good time to buy in the rest of the North Island and a net 2% thought it was a good time to buy in the rest of the Souith Island.

The divergent sentiment around the country reflects the different dynamics at play in each region.  While the high LVR restrictions and mortgage rate increases are common to all markets, factors such as house prices and affordability, the rate of house price appreciation and the supply/demand balance all vary from region to region. 

The RBNZ’s tightening cycle will push up mortgage rates, which in turn will help keep demand for housing in check.  However, the supply side of the housing market equation is equally important.  More dwellings need to be built to house New Zealand’s growing population and help restore balance to the market. The strong pick-up in building consents over the past year suggests this process is getting underway, but it needs to continue, Tuffley said.

 

 

 

 

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Lender Flt 1yr 2yr 3yr
AIA ▼4.55 ▼3.55 3.89 3.99
AIA Special - ▼3.05 3.39 3.69
ANZ 4.44 3.55 3.85 4.49
ANZ Special - 3.05 3.35 3.99
ASB Bank 4.45 ▼3.55 3.89 3.99
ASB Bank Special - ▼3.05 3.39 3.69
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 3.09 3.35 3.69
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.75 4.10 4.55
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - ▼3.15 ▼3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland ▼3.95 ▼2.89 ▼2.97 ▼3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 ▼2.95 ▼3.09 ▼3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.94 4.08 4.39
Kiwibank 4.40 3.84 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 3.09 3.39 3.65
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 ▼4.09 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - ▼3.09 ▼3.39 ▼3.69
The Co-operative Bank - Owner Occ 4.40 ▼3.25 ▼3.45 ▼3.69
The Co-operative Bank - Standard 4.40 ▼3.75 ▼3.85 ▼4.19
Lender Flt 1yr 2yr 3yr
TSB Bank 5.34 ▼3.89 ▼4.15 ▼4.49
TSB Special 4.54 ▼3.09 ▼3.35 ▼3.69
Wairarapa Building Society 4.99 3.95 ▼3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 3.09 3.39 3.69
Median 4.60 3.65 3.89 3.99

Last updated: 31 March 2020 8:55am

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