Housing sentiment improves as Kiwis expect lower rates and rising prices
ASB’s latest Housing Confidence Survey revealed a sharp increase in the proportion of respondents expecting interest rates to fall, reaching the highest levels since the survey began in 1996.
The anticipation of lower rates is boosting market sentiment, despite broader economic uncertainties.
Kim Mundy (pictured above), ASB senior economist, highlighted the trend: “This quarter, confidence is on the rise, supported by falling interest rates and subdued house prices. While a softening labour market might temper some enthusiasm, the overall momentum is building.”
House price expectations show nationwide optimism
House price expectations remain positive for the fifth consecutive quarter, with a net 24% of respondents expecting house price increases, up from 13% last quarter. This sentiment is particularly strong in Auckland and the South Island, where net 29% of respondents foresee gains.
Despite optimism, the pace of expectation growth remains measured, with 72% of respondents anticipating flat or rising prices – significantly lower than the 90% seen in Q1 2024.
Mundy noted that while falling mortgage rates support sentiment, other factors may weigh on house price growth in the short term.
Is it a good time to buy?
A net 20% of respondents now believe it’s a good time to buy, a notable jump from 8% last quarter. Regional shifts are particularly striking:
- Auckland leads with a net 24% of respondents optimistic about buying
- South Island sentiment turned positive, rising to a net 16%
- Canterbury saw a significant increase, with a net 19% believing it’s a favorable time to buy
Emerging buyer optimism aligns with increased sales activity. REINZ data showed a 6.8% rise in sales for the three months to October, alongside faster sales turnaround times.
Outlook for 2025: Building momentum
As optimism strengthens, ASB predicts a more pronounced recovery in 2025. With interest rates expected to ease further and economic conditions stabilising, house prices could see sustained growth, particularly as the market shifts in favour of buyers.
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