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Record house price expectations

Auckland’s tight housing market is the key influence on record high house price expectations, according to a new survey by ASB.

Friday, July 31st 2015, 2:19PM

by Miriam Bell

The bank’s quarterly Housing Confidence Survey shows that 65% of respondents expect house prices to increase.

This is up from 56% last quarter and means that house price expectations are now at their highest since the survey began in 1996.

ASB chief economist Nick Tuffley said house price expectations were steady over 2014 but have now picked up - consistent with the pick-up in the housing market.

Expectations were greatest in Auckland where 71% of respondents expect house prices to increase.

Tuffley said this was because the Auckland housing market was supply constrained at a time when demand was very high.

But expectations of higher Auckland prices eased off towards the end of the quarter.

This might be the first signs of respondents taking into account the likely price impacts of the new investor lending restrictions coming into effect in October 2015, Tuffley said.

“Stronger sentiment outside of Auckland is likely to be reflecting the easing of lending restrictions for the rest of New Zealand, as well as falling interest rates.

“Consistent with these price expectations, recent housing data points to a broadening beyond the recent Auckland-centric theme.”

He said record low interest rates would  continue to boost the wider housing market.

The recent OCR cuts (to 3%) have put downward pressure on floating and short-term fixed mortgages, while longer-term mortgage rates have also been held down.

“Respondents have taken note of the changing tide of expectation for interest rates,” Tuffley said.

In fact, a net 3% of respondents expect lower interest rates over the coming year - compared to a year ago when 70% expected higher interest rates over year ahead.

While Tuffley expects Auckland house price growth to continue, he said it will slow as migration eases, Auckland building activity lifts and investment restrictions offset the impact of lower interest rates.

“But, it is hard to see any supply glut occurring in the market any time soon.”

« Housing market price divergence to slow Auckland drags up NZ house prices »

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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 ▼3.29 ▼3.45 ▼3.85
ANZ Special - ▼2.79 ▼2.95 ▼3.35
ASB Bank 4.45 ▼3.35 ▼3.19 ▼3.85
ASB Bank Special - ▼2.85 ▼2.69 ▼3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - ▼2.79 2.99 ▼2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.75 3.99 4.39
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 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 ▼2.80 ▼2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC ▼4.40 ▼2.95 ▼2.95 ▲3.69
Kainga Ora 4.43 3.55 3.85 4.14
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - ▼2.65 ▼2.79 ▼3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - ▼2.99 ▼3.05 3.69
The Co-operative Bank - Owner Occ 4.40 3.09 3.35 3.69
The Co-operative Bank - Standard 4.40 3.59 3.85 4.19
TSB Bank 5.34 ▼3.59 ▼3.79 ▼4.19
TSB Special 4.54 ▼2.79 ▼2.99 ▼3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.79 ▼2.79 3.39
Median 4.55 3.50 3.79 3.69

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