Aucklanders' continued confidence was a key factor
The COVID-19 crisis has thrown the sector out of balance, impacting investor confidence. However, it seems we can now expect more investors in the market in the coming months as they continue to become more confident in the market, according to ASB.
The latest ASB Investor Confidence Survey revealed that net investor confidence had recovered significantly in the third quarter of the year, jumping 14 points from the previous quarter's record low of -25% to -11%.
“Going into lockdown, many pundits and government agencies forecast a material housing market correction to accompany New Zealand's deepest economic recession in decades. We were less pessimistic with our prediction of a 6% fall in prices, but some were suggesting house price declines well into double-digits,” said ASB senior economist Chris Tennent-Brown, as reported by Fuseworks Media.
“Fast forward a few months and national house prices have bounced back to fresh record highs. Uncertainty is never good for confidence, but as the COVID picture in New Zealand has become clearer, a rising tide of confidence has been reflected in this survey.”
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Aucklanders' continued confidence in the housing market was a key factor, and low-term deposit returns act as a counterbalance – even more so that it is expected to drop. A stabilising sharemarket and the better-than-expected housing market had also driven investor confidence.
However, Auckland's investor confidence did not extend beyond the housing market as a resurgence in confidence was mainly driven by those outside of the region, where it jumped from -23% to -7%, compared to Auckland where confidence increased from -27% to -19% in the June quarter.
“In the regions, we have seen a slight dip in expectations for housing – both rental and own home – whereas, in Auckland, we have seen expectations lift, resulting in a net unchanged result across the country,” Tennent-Brown said.
“The factors influencing Auckland's housing market, which include increasing demand and a more positive than expected outlook for the labour market, mean house prices are likely to continue climbing in Auckland, and we expect to see this reflected in coming quarters in terms of investor confidence. But we don't think the gains will be focused on Auckland – prices across the country should garner support from the combination of low-interest rates and the economic recovery.”
