YouTuber, trader, inequality researcher and author of The Trading Game shares his take on what will lift house prices with the host of Herald NOW Business, Garth Bray.
Fewer people think house prices will rise over the next year, and interest-rate-increase expectations have jumped dramatically as global uncertainty tempers the property market.
The fall in confidence comes even as buying conditions remain relatively positive, according to ASB’s latest Housing Confidence Survey.
The survey showed house-price expectations fell inthe three months to April, with a net 19% of respondents expecting price rises over the next 12 months.
That’s down 30% on the previous survey.
Buying sentiment also eased slightly to a net 20%, although it remained relatively strong compared to recent years, the survey showed.
Most Kiwi households believe mortgage rates have already bottomed, with more expecting rates to rise over the coming year, ASB senior economist Kim Mundy says.
Global developments, particularly the Middle East conflict-sparked fuel crisis, had changed the outlook for inflation and interest rates, ASB senior economist Kim Mundy said.
“House-price expectations have eased as rising fuel costs and inflation concerns flow through to higher interest rate expectations.”
This shift in interest-rate expectations was flowing through to broader housing sentiment, weighing on house-price expectations while elevated housing supply continued to support buying conditions, she said.
“There has been a sharp turnaround in interest-rate expectations, with most households now believing mortgage rates have already bottomed and more expecting rates to rise over the coming year.”
Over the three months to April, a net 48% of respondents now expected interest rates to increase over the next 12 months, Mundy said.
A year ago, a net 48% of respondents expected interest rates to fall.
House price expectations were higher in Canterbury (pictured) than Auckland, the survey showed. Photo / Nate McKinnon, RNZ
However, despite challenges such as higher interest rates, most of those responding to the survey expected house prices to remain flat over the coming year.
Only a net 14% believed house prices would increase in our biggest city, compared to a net 19% nationwide.
By contrast, Canterbury had remained relatively resilient, with house-price expectations holding up and market conditions tightening, although respondents now perceived it was a less favourable time to buy in the region.
A net 30% in Canterbury believed house prices would increase.
Housing supply continued to play an important role in supporting buying sentiment, Mundy said.
“While higher interest rates and the rising cost of living pressures are expected to weigh on demand, abundant housing supply is continuing to support buyer interest, giving purchasers more choice, flexibility and time to make decisions.”
Expectations of higher inflation and interest rates were likely to “dampen/weigh on” housing demand in the near term, particularly as cost‑of‑living pressures persisted, Mundy said.
ASB economists expected inflation to lift above 4% this year, with interest rates also likely to rise over the second half of the year.
“With interest rates likely to rise from here, we expect to see households willing to lock in mortgage rates and for housing market activity to remain relatively subdued in the near term.”
ASB’s Housing Confidence Survey has taken place every three months since 1996, with 2942 respondents nationwide taking part in the most recent survey.
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