ASB senior economist offers insights
Housing confidence fell dramatically in the first quarter of 2022, with only a net 11% of people expecting house prices to increase over the next 12 months, a recent ASB survey revealed.
According to ASB, this slump in house price expectations – down a net 49% from the previous quarter – was the biggest decline in two years.
Considering the “three big housing nasties” of rising mortgage rates, tight credit conditions, and increased supply, the drop in housing confidence isn’t wholly unexpected, said ASB senior economist Mike Jones, adding that house prices had already fallen around 5% from the peaks reported last November.
“Yes, it’s a big fall,” Jones said. “But the surprise, if anything, is that net housing confidence expectations are still positive. We expect at least another 12 months of falling house prices. During the last decent house price shakeout in 2008, housing confidence plumbed lows around -50%.”
The largest drop in house price confidence was seen among South Islanders (ex-Canterbury), with only a net 7% expecting prices to rise. Respondents from Canterbury were on the other end of the spectrum, reporting the smallest fall in confidence among the regions.
The ASB survey also found a decrease in buyer sentiment, with a net 20% of respondents saying that it was a bad time to purchase a house. While this is among the lowest readings of the past 15 years, it wasn’t as bad as the net 32% reported in the previous quarter.
Additionally, a net 81% of ASB’s respondents expected interest rates to increase over the coming year, marking “a fresh 26-year high” in the history of the survey.
“We expect a 9% fall in national house prices over 2022 with falls continuing into the early part of 2023,” Jones added. “All told it’s around a 12% peak-to-trough decline. We don’t expect a house price inflation recovery to kick in until the second half of 2023.”
