Rising house prices and higher interest rates are making people rethink buying property. Photo / Michael Craig
Rising house prices and higher interest rates are making people rethink buying property. Photo / Michael Craig
The prospect of rising house prices and higher interest rates seems to be causing some people to rethink whether this is a good time to buy a house.
The ASB Housing Confidence Survey, released this morning, said housing market activity had continued to a slow in New Zealand as aresult of tighter lending standards imposed by the Reserve Bank.
Further, slowing housing activity had seen house price growth ease, or fall slightly, in several regions.
As a result, ongoing weak housing market activity had undoubtedly continued to weigh on respondents' house price expectations this quarter, ASB chief economist Nick Tuffley said.
Overall, the majority of respondents continued to think now was a bad time to buy a house, he said.
"Price expectations may have dipped but historically-high house prices, higher deposit requirements and expectations for further interest rate increases are likely to be weighing on sentiment.''
The number of people expecting higher house prices fell to the lowest level in five years in the three months to April.
Expectations of higher house prices eased in all regions, but were most pronounced in Christchurch.
High levels of residential construction in Christchurch had significantly reduced the housing shortage caused by the earthquakes. As a result, Christchurch house price growth had been tepid, Tuffley said.
Sentiment about whether or not it was a good time to buy a house remained unchanged in the latest survey. But that masked regional moves. Pessimism in Auckland had eased but deepened elsewhere.
In Auckland, the majority of people continued to view now as a bad time to buy a house.
"Auckland is no different to the rest of the country in that is, it also being impacted by high house prices, high deposit requirements and expectations of further interest rate increases to come.
Price expectations may have dipped but historically-high house prices, higher deposit requirements and expectations for further interest rate increases are likely to be weighing on sentiment.
"However, respondents were actually less pessimistic about whether or not it was a good time to buy than in the three months to January.''
The fact pressures in the Auckland property had eased more than other markets recently, might explain the dip in pessimism in the latest quarter, he said.
