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Pessimism clouds house price expectations

Price growth expectations nationwide are now at the lowest level in five years, ASB’s latest Housing Confidence Survey has found.

Monday, May 15th 2017, 9:00AM

by Miriam Bell

ASB chief economist Nick Tuffley

The survey, which covers the three months to April, reveals that pessimism about buying a house is deepening around the country.

A net 42% of respondents nationwide expect prices to rise, as compared to 46% in the January quarter.

But this is well down on price expectations in 2016. As recently as the October quarter last year, 58% of respondents thought prices would be going up.

While there has been no change in the net amount of respondents (17%) who think it is a bad time to buy a house since the last quarter, a regional breakdown reveals that pessimism has increased in the regions.

There was just one region that bucked the trend and, surprisingly, it was Auckland.

A net 19% of Auckland respondents think it is a bad time to buy a house which is a decline since last year when 27% thought it was a bad time to buy a house.

ASB chief economist Nick Tuffley said historically-high house prices, higher deposit requirements and expectations for further interest rate increases are likely to be weighing on sentiment generally.

“The overall drop in respondents expecting house price gains likely reflects the recent tightening of lending standards, which has slowed housing market activity in many regions.

“But the fact that the number of homes available for sale in the Auckland property market has lifted recently might explain its reduced degree of pessimism this quarter.”

Apart from Auckland, price expectations eased in all regions – although this trend was most pronounced in Christchurch where those expecting price growth dropped from 44% to 32%.

Tuffley said this is likely to reflect rebalancing after the supply surge that followed the earthquakes.

“In Christchurch, higher levels of residential construction have more than made up for the housing shortage caused by the earthquakes.

“As a result, Christchurch house price growth has been tepid recently.”

The survey also reveals that most people now believe that higher interest rates are on the horizon.

For the first time since October 2014, more than half of survey respondents (51%) expect interest rates to rise - up from 37% last quarter.

Tuffley said that mortgage and term deposit rates have lifted off their lows recently.

“In the US, the election of Donald Trump and recent rate hikes by the US Federal Reserve have seen US interest rates lift, which has lifted New Zealand’s longer term interest rates.”

ASB expects the Reserve Bank to leave the OCR on hold until late 2018, which should provide an anchor to short-term rates, he said.

“However, funding issues and offshore rate increases have seen interest rates creep higher over the past six months.”

« Investors: Labour policy would increase rentsFree Investment Property Showcase Events: Auckland, Wellington and Christchurch »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 28 March 2024 9:42am

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