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Record low in buyer sentiment

House buying sentiment has fallen to a historic twenty year low, the latest ASB Housing Confidence Survey reveals.

Wednesday, November 9th 2016, 9:30AM

by Miriam Bell

Following a steep drop in the July quarter, buyer sentiment continued to decline in the October quarter.

A net 26% of respondents now think it is a bad time to buy a house, as compared to a net 20% in the last quarter.

This is the weakest level of buyer sentiment recorded by the survey since it began in 1996.

Buyer sentiment is still lowest in Auckland at -33%, but the fall in sentiment was sharpest in regions outside of Auckland.

ASB chief economist Nick Tuffley said ongoing expectations of house price increases, and higher debt servicing costs, have been subduing buyer sentiment this year.

But the latest LVR requirements, which came into force in October, appear to have pushed sentiment lower, particularly outside Auckland, he said.

“The fact that the 40% investor deposit requirement is having a proportionately larger impact on investors outside of Auckland could explain why sentiment dropped more in other regions this quarter.”

Tuffley said that first home buyers might start to look more favourably at the housing market if the new LVRs slow market activity and house price growth over time.

However, this could be counteracted by caution over recent house price growth and any changes in borrowing costs, he said.

“All up, high house prices and a higher deposit threshold for investors are likely to weigh on sentiment this year.”

While the majority of respondents don’t think it is a good time to buy a house, a majority continue to expect house prices to rise.

Nationwide, a net 58% of respondents expect higher prices to come over the next year, as compared to 61% in the July quarter.

A net 51% of Auckland respondents expect house prices to rise, which is down from 57% in the last quarter, while around the rest of the North Island the balance dipped to a net 64% from 66%.

However, the story is different in the South Island - excluding Canterbury – with a net 66% of respondents expecting house prices to increase, up from a net 56% last quarter.

Meanwhile, the survey shows little change to interest rate expectations in the October quarter, with few respondents expecting interest rates to fall.

Rather most respondents expect interest rates to either remain steady or increase.

Tuffley said this is likely to be because the previous two OCR cuts were associated with little downward movement in mortgage rates.

 

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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 ▼5.79 6.15
TSB Special 4.79 ▼4.34 ▼4.99 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: 19 May 2022 10:42am

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