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BusinessDesk: House price expectations jump in face of low rates

Property
BusinessDesk: House price expectations jump in face of low rates

House price expectations jump in face of low rates: ASB's Housing Confidence Survey

New Zealand house price expectations have jumped in the face low borrowing costs and a supply shortage, according to an ASB survey.

A net 45 percent of respondents expect house prices to increase in the next twelve months, compared with 27 percent in the three months ended Jan. 31, according to the ASB's Housing Confidence Survey. A net 21 percent believe now is a good time to buy, up 1 percent, while 43 percent see interest rates rising in the coming year, up from 27 percent.

"The very strong level of house price expectations demonstrates that there is a risk of more sustained house price inflation," ASB said in the survey. "The Reserve Bank's deliberations over whether to cut the official cash rate out of concern for the high New Zealand dollar will need to be balanced against the greater risk of sparking a sharper pickup in housing-related inflation."

In April, Governor Alan Bollard held the official cash rate at 2.5 percent citing the "restrained" outlook for inflation, while warning that the kiwi dollar's strength may prompt a review of monetary policy if it persists.

In the ASB survey, price expectations were highest in Christchurch, while Auckland reached its highest level since April 2007, the last time the housing market surged.

"While the housing market has picked up over late 2011 and early 2012, with house prices and the number of dwelling sales increasing, this has been underpinned by low levels of new listings and inventory rather than surging demand," the bank said. "We believe that house prices will continue to rise at moderate rates over the rest of 2012 as supply starts to respond to recent price increases."

Confidence in the North Island, excluding Auckland improved slightly, while optimism in Christchurch slipped a little, led by a slowdown in the city's rebuild.

"Housing shortages remain acute in Canterbury and Auckland and as a result house prices are rising in these regions," it said.

The latest figures from the Real Estate Institute showed that housing sales eased in April, with the medium price slipping from March's record high.

Sales rose 13.8 percent to 5,676 when compared with the same month a year earlier, according to REINZ. The national median house price eased $5,000 to $365,000 after reaching a record high of $370,000 in March. It rose 1.4 percent on the same period a year earlier.

(BusinessDesk)

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Source: ASB
Source: ASB
 

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11 Comments

Is this a new indirect way of saying "Rates could rise" ?

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It should read: Chris_J's expectations jump in face of low rates.

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I heard my name mentioned...

 

I'd prefer lower prices right now thank you!  I don't exactly like paying more than I have to.

 

I will add: that you know the market is buoyant when a modest house in a modest suburb of ChCh gets over 15 offers after the first open home and sells significantly above asking price.

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Chris_J, are you from CHCH looking to buy in Auckland?

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Wrong, he is from Chch looking to buy in Grey Lynn LOL~

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I thought he wanted to buy the whole suburb!

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Sorry I'm too poor, I can't even afford half a street in Grey Lynn!

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I was just wondering that's all.  Went to Wood st open home while back and there was a person who came up to Auckland looking to replace several investment props in chch.  Thought you might be the person.. 

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Is he good looking?

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Sorry I am not that way inclined, nor a Labour supporter so I can't judge how looking he is..

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another spindoctor wins again

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