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House price expectations turn bearish, particularly in Auckland — ASB survey

'Dip most pronounced in Auckland' - survey

House price expectations have cooled - particularly in Auckland - and although now is still seen as a bad time to buy, it's not as bad as it has been according to the ASB Housing Confidence Survey out today.

Fewer people are expecting house price increases, especially in Auckland and the North Island, but expectations about interest rates rising are growing.

"Overall, respondents still think it's a bad time to buy a house, but are less pessimistic than three months ago. Fewer people expect house price increases. Every region registered fewer respondents expecting house price gains in the three months to January.

"This survey corresponded with a significant drop in housing market activity following the Reserve Bank's latest investor focused loan-to-value ratio restrictions," the survey said.

Its release follows data from:

• The Real Estate Institute last week which showed the number of Auckland residential properties for sale has risen, prices dropped last month and places took longer to sell;

• Realestate.co.nz showing how Auckland was starting to become a buyer's market as a jump in listings and cooling asking prices began to emerge from January data. New January listings in Auckland were up 5.5 per cent from the same time last year. At the same time demand from buyers has dropped by 25.39 per cent. Average asking prices have remained relatively static at $943,002 compared with $949,898 in December.

• Barfoot & Thompson reported this month that Auckland and Northland sales numbers in January at 629 were their lowest in any month for five years. The average and median prices paid were only marginally higher than those in December.

Nick Tuffley of ASB Bank.
Nick Tuffley of ASB Bank.

The ASB survey said not only had housing market data shown a fall in sales activity recently, it has also suggested house price growth has slowed in a number of regions.

"Price expectations have dipped across the country as fewer people (net 46 per cent) believe house prices will rise (compared to 58 per cent three months ago). That's the second lowest level for price expectations since 2012," the survey said.

"It is likely that weaker market activity has impacted on respondents' house price expectations this quarter. The drop in respondents expecting house price gains was most acute in Auckland and a degree of 'surely prices can't keep rising?' might also be impacting respondents' answers, especially as average Auckland house prices hit the $1m mark late last year," said the survey based on data from 2275 individual respondents and with a margin of error of 1.9 per cent.

Nick Tuffley, ASB chief economist, said the findings were in line with housing market changes.

That's the second lowest level for price expectations since 2012
Nick Tuffley

"Not only has housing market data shown a fall in sales activity recently, it has also suggested house price growth has slowed in a number of regions. It is likely that the weaker market activity has impacted on respondents' house price expectations this quarter," Tuffley said.

Kiwis think the days of super low interest rates are over. After falling sharply in late 2015, interest rate expectations have rebounded over the last six months to see a net 37 per cent expect higher interest rates over the coming year.

"Recent lifts in mortgage rates appear to have respondents bracing themselves for more. While we expect the RBNZ to leave the OCR on hold until late 2018, funding pressures and higher offshore interest rates could see mortgage rates creep higher," Tuffley said.

- NZ Herald

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