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House price expectations plummet

New Zealanders’ expectations of house price growth have fallen to a five and a half year low – driven by a sharp dive in Aucklanders’ confidence.

Friday, August 25th 2017, 12:00AM

by The Landlord

ASB has released its latest Housing Confidence Survey, which covers the three months to July, and it indicates that most people are well aware of the market slowdown.

The survey shows that 32% of respondents nationally expect house price growth over the next year, as compared to 42% last quarter.

It is Aucklanders who are driving the decline. Just 15% of Auckland respondents now expect house prices to grow – and that level is an eight year low.

For ASB chief economist Nick Tuffley, there’s no doubt the dip in confidence reflects the fact house sales volumes are at the lowest levels since 2014.

“The subdued sales activity has coincided with the market hitting the brakes on house price growth, with prices falling slightly in Auckland and Christchurch.

“In the case of Auckland, this is the first time house prices have fallen since 2010.”

In response to the softening market, people are adjusting their expectations accordingly, he said.

However, it seems that the softer price growth is starting to affect people’s perceptions of whether it is a bad time to buy a house.

While 25% of survey respondents nationally still think it is a bad time to buy a house, that is an improvement on the 28% who thought it was last quarter.

Those thinking it’s a bad time to buy eased the most in Auckland where a 12% think it’s a bad time to buy down from a 19% last quarter.

Tuffley said Auckland is no longer the most pessimistic region – for the first time since July 2013.

This is likely to reflect the recent softening Auckland house prices, but affordability constraints will limit how “good” people feel about buying a house in Auckland for some time.

The market’s slowdown has been largely laid at the feet of the Reserve Bank’s LVR regime.

Tuffley said they certainly think the second round of LVRs has kicked things up a gear, with the 40% investor threshold making it much harder for some people to buy.

“But interest rate hikes, which occurred around the same time, have also played a part.”

The survey reflects this, with 47% of respondents expecting higher interest rates to come – which is likely to have tempered housing expectations.

Given market conditions are likely to remain soft over the next few quarters, ASB anticipates a greater drop in house price expectations in next quarter’s survey.

Yet Tuffley said that when they step back and take a look at the big picture, it’s still one of very strong demand and limited supply.

“Ultimately that means upward pressure on prices will continue, just not to the same degree we’ve seen.”

Read more:

Stalling market no reason to panic 

Call for LVR review as sales plunge 

« Free Investment Property Showcase Events: Auckland, Wellington and ChristchurchFalling consents mean shortage not addressed »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

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