‘Done and dusted’: More Kiwis believe housing market downturn is over despite sluggish market - ASB survey

Prices have bounced but sales are slow. Photo / Fiona Goodall

The housing market might still be sluggish, with sales volume at historically low levels, but New Zealanders are increasingly confident it is on the turn.

ASB’s latest Housing Confidence survey shows house price expectations continued to increase, in the three months to January.

A net 51 per cent of Kiwis now expect them to rise – the highest net reading recorded since October 2021, before the start of the most recent housing market downturn.

The data highlighted New Zealanders were largely of the opinion the downturn was “done and dusted”, ASB senior economist Kim Mundy said.

Aucklanders were the most confident the tide had turned, with a net 56 per cent of respondents expecting higher house prices ahead. However, expectations for higher house prices were evident nationally, Mundy said.

“Last time net house price expectations were at this level, annual house price growth was at almost 30 per cent,” she said.

“As of January 2024, annual growth was a more muted 2.2 per cent, reminding us that house price expectations are more of a directional indicator than a reflection of what the market is doing.”

While house prices were likely to continue rising, ASB economists were not forecasting the type of growth seen in the upswing through 2020 and 2021, with still-high interest rates acting as a powerful market moderator, she said.

New Zealanders were braced for the high-interest rate environment to continue, but only a net 15 per cent of respondents were expecting further rate hikes, down from 28 per cent in the three months to October.

That suggested more people think a peak in rates might be just around the corner, Mundy said.

As for whether now is a good time to buy a property, Kiwis appeared to be firmly on the fence, with 51 per cent of respondents saying it’s “neither a good nor bad time to buy”.

This lack of conviction in the state of the market had been the case since the end of 2022, Mundy said.

“We acknowledge there are quite a few conflicting signals for prospective buyers: a turning market, policy changes, high debt servicing costs, possible debt-to-income restrictions and upfront affordability constraints.”

January figures for the Real Estate Institute showed the Reinz House Price Index did rise by 1 per cent for the month. But prices have risen by just 2 per cent over the past 12 months, and have effectively been tracking sideways since September.

Meanwhile, Barfoot & Thompson sales data released on Tuesday shows the number of Auckland houses for sale with the agency hit an 11-year peak with 5382 properties now on its books.

Not since 2013 has the city had so many residential properties available, jumping from 1221 listings in January to the new high, Barfoot & Thompson said.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.