Don’t buy a house now, 1 in 5 Kiwis say

by NZ Adviser17 Aug 2016
Twenty per cent of New Zealanders think now is a bad time to be buying a house, a new ASB Housing Confidence Survey for the three months to July shows. 

It is a sharp fall in sentiment compared to the net 3% last quarter who thought it was a bad time to buy and is the weakest sentiment since early 2012.

More people think house prices will rise in the next twelve months and for the first time in over a year, more people anticipate interest rates to rise too, convinced they have reached the bottom of the barrel.   

ASB chief economist Nick Tuffley is not surprised in the drop in sentiment as expectations for higher house prices and higher interest rates, picked up over the quarter.

“People appear to be wary of higher debt servicing costs on top of already-high house prices, which has pushed down sentiment,” Tuffley says.

The sentiment could fall even lower when tighter investor loan-to-value restrictions take effect in October. 

“The requirement for investors around the country to have a 40% deposit will undoubtedly knock investors’ confidence,” Tuffley says.

Nationally, 13% of respondents say it is a good time to buy a house, while 33% say it is a bad time (this compares to 17% and 20% last quarter). The difference is the net 20% who think now is a bad time to buy, down from 3% last quarter.

In Auckland, sentiment is even lower, with a net 32% thinking now is a bad time to buy.

“As affordability in Auckland is squeezed more so than elsewhere, we expect to see sentiment continue to drag relative to the rest of the country,” Tuffley says.

Nationally, 68% of respondents expect higher prices over the next 12 months (compared to 59% last quarter), while only 7% (8%) expect prices to fall.

More than half of Aucklanders (57%) expect house prices to rise in the next year. Confidence in the North Island, outside Auckland, is at an all-time high of 66%.

“House price expectations are likely being influenced by the degree of coverage house prices are getting in the New Zealand media, yet the across-the-board lift does reflect the prices increase we’ve seen across the country recently,” Tuffley says. 

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