Press Release – ASB Bank
* Housing Confidence eased in the three months to October 2011 * House price expectations decreased nationwide, but improved in Christchurch * More people expect interest rates to rise ASB NZ Housing Confidence Survey
Three months to October 2011
Housing confidence dips, but Christchurch leads the way in price expectations
* Housing Confidence eased in the three months to October 2011
* House price expectations decreased nationwide, but improved in Christchurch
* More people expect interest rates to rise
Housing confidence continued to drift downwards in the three months to October, while Christchurch is showing signs of a housing market recovery, according to the latest ASB NZ Housing Confidence Survey.
The ASB Housing Confidence Index edged down one point over the quarter, with a net 24 percent of respondents saying that now is a good time to buy a house, compared to 25 percent in the previous quarter. Sentiment remains slightly above the historical average of net 22 percent.
ASB Chief Economist Nick Tuffley says that while nationwide house price expectations have decreased slightly over the past quarter, there was a continued improvement in price expectations in Christchurch. “A net 43 percent of those surveyed in Christchurch expect house prices will rise, compared to just over a net third of respondents in Auckland and net 22 percent across New Zealand. This suggests underlying housing demand in the Canterbury region is recovering from impacts of the earthquakes. We expect Government and insurance payouts will support a continued recovery in house sales in the region as households relocate over the coming year.”
On the flip side, the perceptions of the current market in Christchurch were negative. “A negative six percent of respondents in Christchurch thought now was a good time to buy a house – compared to a positive net 24 percent across New Zealand as a whole, reflecting the issues still faced by the region,” Mr Tuffley says.
Nationally, while there was an increase in the number of respondents who expect interest rates will increase over the next year, a monthly breakdown of the results indicate this largely reflects high interest rate expectations early in the survey period. “A net 57 percent of respondents now expect interest rates to rise, up from a net 46 percent in the July quarter,” Mr Tuffley says. “However, there was a steady decline in interest rate expectations over the quarter, reflecting the deterioration in global market conditions over this period.”
Recent market data continue to point to a gradual pick-up in underlying housing demand. Mr Tuffley says the housing market still looks to be constrained by supply, with new house listings continuing to decline. The Auckland housing market is particularly tight, which is underpinning stronger house price growth in the region.
“We expect house prices nationwide to grow modestly at a rate of around 3 percent over the coming year. House price growth in Auckland is likely to be stronger than that, reflecting its relatively tighter market,” Mr Tuffley says.