ASB Housing Confidence Survey

Tuesday, 22 May 2018, 8:46 am
Press Release: ASB Bank

EMBARGOED UNTIL 5AM, TUESDAY 22 MAY, 2018

Post-election rebound

· House price expectations rebound from post-election lows

· Cantabrians are the most optimistic that now is a good time to buy a house

· Despite recent fall in interest rates the majority still expect higher interest rates ahead

House price expectations have rebounded back to where they were before the 2017 General Election according to the latest ASB Housing Confidence Survey.

A net 32% of respondents (for the three months to May 2018) expect higher house prices over the next year, compared to just 16% at the start of the year and 17% over the three months to last October.

ASB chief economist Nick Tuffley says that’s a significant jump “The ASB Housing Confidence Survey data clearly shows the rebound in nationwide and regional house price expectations. But it’s worth remembering that 32% net balance is still well below the +42% this time last year. Stretched housing affordability and respondents’ uncertainty over the impact of the Government’s new housing policies suggest that we’re actually past the peak for house price increases.”

House price expectations firmed for all broad regional areas. While still having the lowest net balance of the regions, price expectations hit a 12-month high in Auckland, with a net 19% expecting price increases (previously +8%). Canterbury house price expectations firmed, but at +21% remained below the nationwide average for the 14th consecutive quarter.

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House price expectations were considerably firmer in other regions. Those in the rest of the North Island leaped to +43% (up from 20% last quarter), and house price expectations were most upbeat in the rest of the South Island reaching a net 45% (up from 30% last quarter).

“Less upbeat house price expectations for Auckland and Canterbury are consistent with broadly flat observed house prices. Conversely, stronger house price expectations for the rest of the country are consistent with sizeable house price increases observed outside of the major urban areas,” Tuffley says.

Canterbury reigns when it comes to optimism over whether it’s a good or bad time to buy a house

When it comes to house-buying sentiment, Christchurch remains the only region where the majority of respondents (a net 6 %) consider it a good time to buy.

“In fact, the net balance for the region is the highest since early 2011, suggesting market conditions for buyers are the most favourable since the devastating February 2011 earthquake,” Tuffley says.

In most other regions pessimists outnumber optimists, with 14% of respondents nationwide saying it’s a good time to buy, while 20% of nationwide respondents say it’s a bad time.

However, there are signs this pessimism is abating, with the net balance considerably less negative than it was a year ago (-17%).

“It’s the least negative net balance in two years and we believe it signals that although respondents are generally cautious on the outlook, there is slowly growing confidence that a soft landing for the housing market could be achieved,” Tuffley says.

Interest rate outlook

Most people (net 32%) expect higher interest rates over the next 12 months. This was fractionally up on the previous quarter but lower than a year ago. “This was despite recent falls to carded fixed mortgage interest rates and likely reflects the expectation that the RBNZ will eventually lift the Official Cash Rate (OCR) from record lows,” Tuffley says. “Indeed, we expect the OCR to move up from August 2019, but assume a gradual path of policy tightening and historically low OCR endpoint this cycle. This should ensure that mortgage interest rates stay reasonably low over the next few years.”

ENDS

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