Housing confidence rises slightly

For only the second quarter since mid-2003, more people think its a good time to buy a house than a bad time, according to the ASB housing confidence survey.

In the July quarter, a net 5 per cent of the 600 people sampled nationwide considered now a good time, the survey published today said.

ASB chief economist Anthony Byett said the sentiment reflected a steady and more balanced housing market than had been seen over the past few years.

During the period since mid-2003, and excluding the one positive quarter, an average net of minus 7 per cent of those questioned had thought it a good time to buy.

For all the previous decade from 1996 to mid-2003 confidence was positive, peaking around 70 per cent in the late-1990s, and falling away sharply from the start of 2002.

Despite improving confidence in the market, people continued to be less optimistic about house price increases, Mr Byett said.

A net 7 per cent this quarter expected house price increases in the next 12 months, compared with a net 2 per cent in the previous quarter.

"This small rise in confidence is backed up in recent reports from various sources that any slowdown in the housing market should be moderate" he said.

The overall picture was one of more balance between buyers and sellers.

People with realistic expectations could generally buy and sell their houses and do so in a more relaxed manner than in recent years, Mr Byett said.

"It is important to remember, though, that a flat to small average house price increase still means prices are falling for some properties.

"As always, it is therefore prudent to take care in the sale and purchase process, giving due consideration to all personal circumstances and commitments, in order not to become a forced seller," he said.

Most respondents still expect higher interest rates -- a net 41 per cent, up from a net 35 per cent -- but levels of those expecting a rise are still lower than throughout 2004 and 2005.

Mr Byett said more than 40 per cent of fixed rate home loans would roll over in the next year, with the new rates at which people fixed likely to be significantly higher than before, placing more pressure on household income.

Data for the survey were obtained by questioning 200 people in Auckland, 200 in the rest of the North Island, and 200 in the South Island.

Confidence was highest in the South Island where a net 9 per cent considered it a good time to buy, compared to 7 per cent in Auckland and just 1 per cent in the rest of the North Island.

In Auckland a net 9 per cent thought house prices would increase, while in the other two areas the figure was 6 per cent.

And even though South Islanders had most confidence in the housing market, they were also the group most expecting an interest rate rise with the figure a net 55 per cent.

Conversely while the rest of the North Island group was least confident they were also the group least expecting a rate rise, with a net 33 per cent figure. In Auckland the figure was 41 per cent, the same as the national average.

- NZPA