House price expectations have slipped again in the three months to January along with mortgage rate expectations, according to the latest ASB Housing Confidence Survey.
The survey shows a net 23% of respondents anticipate price increases, up from 16% this time last year but lower than the long-term average of 28%. Expectations are lowest in Auckland, where only a net 8% expect house prices to rise.
It also shows a fall in interest rate expectations in every region for the second quarter in a row, with only a net of 14% anticipating higher interest rates, down from 26% in the October quarter. All four regions – Auckland, the rest of the North Island, Canterbury and the rest of the South Island – experienced a decrease of similar magnitude, though the fall was most pronounced in Canterbury.
“With core inflation seemingly on the low side, we expect the Reserve Bank of New Zealand (RBNZ) will hold off on any Official Cash Rate (OCR) hikes for a considerable period,” ASB chief economist Nick Tuffley said. “Given these factors, it is unsurprising that fewer Kiwis are anticipating higher mortgage rates.
“We do note that proposed new bank capital requirements may trigger some upward movement in mortgage rates over the longer term, even in the absence of any OCR increase.”
The survey also revealed that most respondents believe it is a good time to buy a house for the first time in five and a half years. Of those surveyed, 17% thought it was a good time to buy, while 16% thought it was a bad time – a recent low. A further 51% say it was neither good nor bad, and 15% didn’t know. Canterbury maintained its dominance as the most optimistic part of the country.
“Whilst sentiment in the other parts of the country was more restrained, there was a clear trend towards greater buyer optimism,” Tuffley noted.