People in Auckland and Christchurch are more bullish than other Kiwis in expecting house prices to rise, new polling by the Reserve Bank of New Zealand shows.
The central bank's house price expectations survey, which has been running since the June 2011 quarter, shows a growing amount of New Zealanders are expecting house prices to rise over the coming year, although many expect that the rise to be eaten into by general inflation. Correspondingly, fewer were expecting house price falls over the coming year, compared with a year ago.
The latest survey results for the current March quarter, released yesterday, showed a net 53.1% of respondents throughout the country believed house prices would rise over the coming year. That was up from 40.9% in the December 2011 quarter, and 34.1% in the June 2011 quarter. The Reserve Bank noted that with only four quarters of data available, it was not possible to know whether the changes in expectations were seasonal.
The weighted mean expectation for house price movements of the 620 respondents to the latest survey is for a rise of 3.1%, which is up from 2.2% in the initial June 2011 quarter survey. The median expectation if for a 2% rise, compared with medians of 0% in each of the first three surveys. The Reserve Bank said in a research paper accompanying the latest survey that 33% of respondents expected no change in prices over the year ahead.
Figures on inflation expectations, released by the Reserve Bank at the same time yesterday, show general expectations for 2.2% CPI inflation over the year ahead.
A net 65% of Aucklanders expected house price rises over the coming year, up from 46% in the June 2011 quarter. Christchurch residents were similar, with a net 66% expecting increases, up from 42% last June.
"Auckland’s households have been consistently more likely to expect house prices to rise than those in other regions, but perhaps the most interesting feature of this table in the big increase since June in the number of Wellington respondents expecting house prices to rise (net 50 percent in March 2012, compared with a net 14 per cent in June 2011)," the Reserve Bank said in the research paper.
"These results seem consistent with the latest official quarterly data from Property IQ for the year to September 2011, which shows actual house price inflation in Wellington lagging behind Auckland and Christchurch (-0.7 percent compared to 4.0 percent and 4.2 percent respectively). The mean expectation of Auckland and Christchurch respondents is around 4 percent, while the mean expectation of Wellington respondents is around 2 percent," the Reserve Bank said.
Responses
Here are the responses to the question, In one year’s time do you think house prices overall will have increased, decreased or stayed the same compared to now?
If a respondent expected an increase or decrease, they were asked, By what percentage do you think they will have increased/decreased?
And here is the regional breakdown
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27 Comments
SK - i thought it said there was a 4.2% rise?? What will happen this year? No idea. Best guess? no idea. I'm in Aus, and prices are even more ridiculous, so in theory NZ could get to that point, but even Aus is now starting to drop which may well have a big impact on NZ. I am getting the impression that Aus is now facing up to the GFC hangover after Rudd kicked the can down the road with too much stimulus. Certainly not confident for house prices in Victoria which has a) the lowest yields and b) the most exposure to the wrong side of the 2 speed economy. Happy to rent a 1.2 million house for 600 per week and bank the 70,000 per year in savings. I'm guessing in Akld its not as bad as that, but the savings would still be 30-40 gs per year on a 1 mill plus house (and higher when rates go up again).
Madness. Ban foreign ownership of rental housing and see if that has any effect as I strongly suspect it would. At some point housing will HAVE to come more in line with earnings for average Joe's otherwise they will be permanently sentenced to renting and therein in lies one of the causes of our deteriorating social values.
SK,
the sentiments measured by the survey are a classic contrarian indicator - it looks to be the market peak for property at least in Auckland (when most are bullish) just as it was for equities internationally in late 2007. Its no different this time. Time to cash up and sell.
chuckle - yes, it's interesting, isn't it? When you get enough folk doing the same thing that the trend can be identified, the thing's probably acquired self-generating momentum.
The moment it has, you can predict it will overshoot, and the only safe bet is counter-cyclical.
Funny how many play stock, real-estate, collection, vinyards, kiwifruit, asparagus..... without understanding that. I often wonder how many are the same folk; got burned in '87, got burned on '07, learning nil.
hmmm maybe its the opposite...its not based on any fundimentals, or its contarian to them. So, what this says is lemmings many of whom seem to know little of whats going on globally think following everyone else as the property market is going up yet more is a good idea......same with 1929....and what a mess that was......
For me one of the biggest things is what endevours(s) ie real work or wealth generation, is supporting the current price let alone its increase....I cant see anything.
Me, I sit and watch.....
regards
You can do better than sit and watch. Counter-cyclical works short-term - running to the bow of the Titanic while eeryone goes to the stern, buys you space to yourself to do something, at the expense of time. What it doesn't do, is remove the bigger problem.
A good long-game strategist would have embarked with a lilo and a pump (actually, one that smart would have taken two of both), gone to the bow, pumped 'er up and survived. I'm not sure sitting and watching is an option :)
@squirrel - The old Auckland City was up 10% last year.
@Macadder/powerdown - so you are selling up your imaginary property portfolios because the market has now peaked? Good luck with that strategy.
@steve - good luck sitting and watching - the dow is hitting 13000 and the time to buy auckland property was in the depths of despair in 2010 so are you going to wait for another economic cycle to do something.
Like Ive said before, when you have a coyoti moment, first realise you are on fresh air, then wait while you fall a long way, so its the impact at the end that hurts....right now with the dow coyoti is still running after roadrunner over fresh air imagining a free and not worked for lunch.....
I havent bought any properties in 15 years bar the one we own despite the considerable advice of others and wishes of my other half to do so....
There was no depths of dispair in 2010, at least compared to today....the gains since then are at best marginal and some areas clearly dropping...the market stands 100% over-valued at least....it cant go much higher but it can fall a long long way.
The economic cycles are now different, we are now past peak oil so its declining GDP for ever. Economic cycles and buying property, sure in say 6 years when houses are worth 25~40% of what it now is....then its worth buying....
regards
Dow @ 13,000, thats because people have money to spend.. House prices have fallen more than 35% in the US. So all those who have handed in their keys are renting (which is much less than the mortgage they were paying) or those who are buying now are paying 30% less than what they would have paid at the peak of the market.. This leaves them with so much more disposable money to spend on other things, where as out here, most of our money goes into paying a mortgage..
If you are so sure the Dow is overpriced at 13k, tell me which of the 30 components you consider to be overpriced and why. These are some pretty amazing companies. About a third of them have never missed a dividend in 50 years and a couple of them have been paying dividends non stop for over 100 years. The Dow isn't at 13k because GS is buying; GS is buying because the Dow is at 13k.
Yes SK
I'm selling up, my property is on the market in 4-6 weeks and if I don't get 5+ % above GV I will be annoyed. I intend to put the funds into a range of other investments but not property at this time. And I don't rely on luck, my strategy is simple.... buy low and sell high... do the opposite of what most others do. I did the same with Aust commodity equities buying from Nov 2008 through Mar 2009, the returns ultimately transended everything else, yet most thought I was mad at the time.
We returned from four years overseas in Aug 2010. We rented, waiting for prices to drop in our area ( Beachlands, Auckland) . They haven't. Rents have reached ridiculous prices. We have just bought, paying $12k over the new GV, which went up $40k from three years ago! We got fed up sitting and watching. Time to settle and get on with enjoying life! We have been cautious though, buying a fairly new house, in the mid-range for our area. Btw, nothing other than sections under $500k in this area.
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