Expectations persist despite efforts to cool the market
Despite recent efforts by the government to cool the housing market, a study from ASB found that expectations that house prices will continue to climb remain high.
A net 64% of respondents in ASB’s latest housing confidence survey, which covers the three months ended April 2021, said that they expect house prices to continue climbing in the coming 12 months – down from last quarter’s record 73%, but still the third highest result in the survey’s 25-year history.
Read more: Housing confidence hits 25-year high – ASB
Mike Jones, senior economist at ASB, said that the result is further evidence that housing market pressure “is being released only gradually.”
“It is notable that housing confidence remains at such high levels,” said Jones. “After all, there’s been plenty of policy-related potholes for the market to dodge lately. LVR restrictions are back on, the loan repayment deferral scheme has come to an end, mortgage rates are no longer in freefall and, in late March, some of the government’s recent tax changes came into effect. Housing confidence joins a number of other housing indicators pointing to stubborn resistance.”
Jones said that his team are “already of the view house price momentum was starting to peak, and we might see a bit more of a drop in confidence next quarter as the full impact of the government’s tax changes are felt.”
“But, so far, housing views have remained steady,” said Jones. “We’re seeing this reflected in Kiwis’ perceptions of whether it’s a good time to buy, with would-be homeowners understandably frustrated. A net 21% of surveyed respondents now believe it’s a bad time to buy a house. That’s close to as gloomy as it gets for this index and completes a full reversal of the positive buyer sentiment prevailing this time last year.”
