Homebuyers 'slightly less pessimistic': report

by NZ Adviser20 Feb 2017
House price expectations have cooled as the market cools but people expect interest rates to rise over the coming year, a new report has revealed. 

According to ASB’s Housing Confidence Survey for the January quarter, buyer sentiment has edged higher but is still hovering around record lows with New Zealanders still saying it’s a bad time to buy a house.

A net 17% of people think it’s a bad time to buy a house, up from a net 26% (a historical low) in October.

Forty-six per cent of respondents believe house prices will rise (compared to 58% three months ago), the second lowest level for price expectations since 2012.

ASB chief economist Nick Tuffley says the survey findings correspond with the slow-down in housing market activity following the Reserve Bank’s latest investor-focussed loan-to-value ratio (LVR) restrictions.

“Not only has housing market data shown a fall in sales activity recently, it has also suggested house price growth has slowed in a number of regions,” Tuffley says.

“It is likely that the weaker market activity has impacted on respondents’ house price expectations this quarter.

“Elevated house prices are likely to still be weighing on sentiment, as are the higher deposit requirements now facing investors in particular,” he said.

“On balance, respondents see it as a bad time to buy, but are slightly less pessimistic than three months ago.”

Tuffley also said Kiwis seem to believe the days of super low interest rate days are over.

“Recent lifts in mortgage rates appear to have respondents bracing themselves for more. While we expect the RBNZ to leave the OCR on hold until late 2018, funding pressures and higher offshore interest rates could see mortgage rates creep higher,” Tuffley said.
 

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