Summary Normal service looked to be returning following post September 2017 General Election weakness, according to our latest ASB Housing Confidence Survey. The net balance of respondents expecting house prices to increase rose to 32%, back to where it was in the July 2017 survey, and well above October 2017 (+17%) and January 2018 (+16%) lulls. Auckland house price expectations (+19%) hit a 12-month high.
House price expectations remained the most bullish outside of Auckland and Canterbury, consistent with recent housing market data showing flat house prices in Auckland and Canterbury but still-sizeable increases elsewhere. However, net balances were 10 percentage points lower than just 12 months ago (+42%), suggesting we are past for peak for house price increases. The cooling in price expectations could be linked to stretched housing affordability and respondents’ uncertainty over the impact of the Government’s new housing policies.
Many respondents continued to expect higher interest rates over the next 12 months, with little change compared to the previous survey. 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.
The majority of respondents still view it not to be a good time to buy a new house. Considering the sizeable run-up of house prices in recent years and stretched affordability, this was perhaps understandable. However, in our recent survey the net balance (-6%) was the least negative in two years. Canterbury (+6%) was the only region where the majority of respondents consider it a good time to buy, with the net balance for the region the highest since the devastating earthquakes in early 2011. Given their recent resurgence in house prices, net balances were the most negative in the rest of the North Island (-10) and the Rest of the South Island (-7%).
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