In contrast, buyer sentiment fell over the quarter
House price confidence has reached the highest level in three years, with Auckland finally catching up with the sky-high levels of the rest of New Zealand – according to ASB’s latest report.
ASB’s latest Housing Confidence Survey revealed above-average house price expectations – at the expense of housing affordability.
The report revealed that a net 9% of the respondents believe now is an excellent time to buy a home, down from a net 13% last quarter. Meanwhile, the respondents had a balanced perception of interest rates over the three months to January with a net 0% expecting a rise.
“The respondents’ interest rate expectations have been wrong-footed several times over the past year, thanks to volatility in the global and local economies and some mixed signals from the Reserve Bank of New Zealand (RBNZ),” Nick Tuffley, chief economist at ASB, said.
Read more: Coronavirus could slow down house price growth – economist
A net 54% of the respondents expected higher house prices over the coming year compared to only 27% last quarter. Auckland took the spotlight with a jump from 2% to 42% of the respondents expecting a house price increase.
“The continued rise in house price expectation is very much consistent with our assessment of the housing market, while jump in Auckland house price expectations has been splendid in a short amount of time. Housing demand is running hot on the back of the large falls in mortgage rates we’ve seen over the past year and the cancellation of the Capital Gains Tax in April,” Tuffley said.
Meanwhile, buyer sentiment plummeted over the quarter – with Auckland and South Island seeing a noticeable change with a 6% drop and an 8% drop, respectively.
“Perceptions of whether it’s a good time to buy are generally inversely related to rates of house price inflation. The fact that buyer perceptions suffered a setback this quarter is not particularly surprising, given the galloping price expectations,” Tuffley said. “Despite strong wage growth and record low-interest rates, housing affordability is clearly under pressure again thanks to rising house prices.”
