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Halo of confidence

Auckland’s supercharged housing market is impacting on price expectations around the country, according to a new ASB survey.

Wednesday, May 11th 2016, 9:00AM

by Miriam Bell

ASB chief economist Nick Tuffley

The bank’s latest Housing Confidence Survey shows that nationwide house price expectations are on the rise again.

In the first quarter of 2016, fifty percent of respondents thought house prices will go up over the next year, as compared to 44% in the last quarter of 2015.

ASB chief economist Nick Tuffley said confidence in further house price increases is below that of the peaks during 2014/2015.

Yet the survey indicates respondents believe the upward house price momentum has not yet ended, he said. 

“Influenced by higher Auckland house prices, the spill-over effect from Auckland property prices in earlier quarters and, due to the still-declining interest rates, we expect the nationwide average house price to increase around 5-6% over 2016.”

But it seems that Auckland’s sky-high prices are giving momentum to a “halo effect” on price expectations in other parts of New Zealand, particularly around the rest of the North Island.

While 39% of respondents expect Auckland’s house prices to increase, 61% of respondents expect house prices in the rest of the North Island to increase.

The survey noted that the level of house price growth expectations among people in the North Island, but excluding Auckland, is now very high.

At the same time, 16% of respondents believe now is a bad time to buy a house in Auckland – which is an improvement on the 22% who thought it was a bad time to buy in Auckland in the last quarter.

Tuffley said a key factor in this is likely to be the inter-related issue of sharply higher Auckland house prices and, in spite of the low interest rates, the high mortgage repayments.

Meanwhile, expectations for price growth in the South Island were little changed since the last quarter of 2015.

Fifty six percent of respondents expected price growth outside of Canterbury, but just 37% expected price growth in Canterbury (37%).

On balance, respondents nationwide believe now is a bad time to buy a house.

Seventeen percent said now is a good time to buy, while 20% said it is a bad time – as compared to 16% and 21% last quarter.

The expectation that now is a good time to buy was strongest in the South Island outside of Canterbury (9%).

When it comes to interest rates expectations, the survey showed that respondents generally continue to expect them to fall over the coming year.

Tuffley said this was helping to boost both sentiment and house price expectations.

ASB expects the Reserve Bank to cut the OCR by an additional 50bp over 2016, he added

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 16 May 2022 9:03am

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