The decline in confidence reflects the shortage of housing available for sale.
(PRWEB) February 25, 2013
• House price expectations just a fraction below previous peak levels.
- Housing confidence declines as fewer see now as a good time to buy.
- Interest rate expectations remain steady.
In the three months to January, a net 59% of respondents now expect prices to rise over the next 12 months, just a fraction below the January 2003 peak of 61%. Price expectations increased the most in Auckland and remained the highest in Christchurch and Auckland.
However, the overall ASB Housing Confidence Index declined to 13% from 23%. While this decline in confidence was seen across the country, confidence is the lowest in Christchurch and Auckland. In these regions, net confidence has now turned negative, indicating respondents feel that it is a bad time to buy.
ASB Chief Economist Nick Tuffley says the decline in confidence reflects the shortage of housing available for sale.
“Listings remain low and have not kept up with the modest increase in demand,” Mr Tuffley says. “Housing inventory levels have fallen sharply and the market is tilted in favour of sellers. Supply shortages have been most acute in Christchurch and Auckland. As a result, price increases are strongest in these areas.”
Interest rate expectations remained stable in the latest survey, with only 32% of expecting interest rates to rise over the next 12 months.
“This is consistent with our view on the OCR and floating mortgage rate,” says Mr Tuffley. However, Mr Tuffley warns borrowers that change may be on the horizon. “Fixed mortgage rates are likely to increase over the coming year as the market gradually moves to anticipate cash rate increases from the RBNZ.”