HOT TOPICS:   Housing affordability  |  NZ$   | Inflation                                                     RESOURCES:    Economic calendar   |   Median multiples

The comment stream

Recent comments

Reader poll

A holiday.
62% (121 votes)
A wedding.
26% (51 votes)
A house.
6% (12 votes)
A car.
4% (8 votes)
Education.
2% (4 votes)
Total voters: 196

In your opinion, what's the last thing someone should borrow money to pay for?

Older polls

Near record numbers of people expect house price rises, but more reckon now is not a good time to buy, according to ASB survey

Posted in Property

The number of people expecting house prices to rise is now at close to record levels, according to the latest quarterly ASB Housing Confidence Survey.

"In the three months to January, a net 59% of respondents [to the survey] now expect prices to rise over the next 12 months, just a fraction below the January 2003 peak of 61%," ASB chief economist Nick Tuffley said.

The survey results are consistent with recent actual trends in the housing market, with strong activity matched by rising prices, particularly in Auckland.

Tuffley said price expectations increased the most in Auckland and remained at the highest levels in both Christchurch and Auckland.

Conversely, however, the survey found that there was a drop in the numbers of those believing now was a good time to buy. More people in Christchurch and Auckland actually believe now is a bad time to buy than a good time.

"The overall ASB Housing Confidence Index declined to 13% from 23%. While this decline in confidence was seen across the country, confidence is the lowest in Christchurch and Auckland, Tuffley said.

He believed the decline in confidence reflected the shortage of housing available for sale.

“Listings remain low and have not kept up with the modest increase in demand,” he said.

“Housing inventory levels have fallen sharply and the market is tilted in favour of sellers. Supply shortages have been most acute in Christchurch and Auckland. As a result, price increases are strongest in these areas.”

The survey also covers interest rate expectations.

Tuffley said these remained stable in the latest survey, with only 32% of respondents expecting interest rates to rise over the next 12 months.

“This is consistent with our view on the [Official Cash Rate] and floating mortgage rate,” says Mr Tuffley.

However, Tuffley warned that change may be on the horizon.

“Fixed mortgage rates are likely to increase over the coming year as the market gradually moves to anticipate cash rate increases from the RBNZ.”

In terms of the detailed numbers, a total of 66% of survey respondents expected higher house prices (up from 64% in the last quarter) against 8% expecting lower prices (unchanged). The rest of the respondents fall in the "expect the same" or "don't know" categories.

Just 31% of respondents now say it is a good time to buy a house (37% previously), while 18% (up from 14%), now say it is a bad time and the rest of the respondents either say it is neither a good nor bad time, or they don't know.

On interest rates, 32% (down from 35%), expect higher rates, while an unchanged 8% expect lower rates. Most people, namely 39% (down from 42%), think interest rates will stay the same, while the "don't knows", at 20%, have risen from 16%

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

23 Comments

More of same for Auckland

More of same for Auckland this year. Heaps of first home buyers trying to jump in now- a bit late to the party....and with their parents as guarantors 

Lambs to the slaughter, both

Lambs to the slaughter, both parties.

What is it that AKL can offer

What is it that AKL can offer but Hamilton, Tauranga, Rotorua, Taupo, Palmy, Wanganui, Napier, Hastings, Wellington, Chch (opps), Q'town and lots of others cannot offer?
 
What is it that makes AKL a much more attractive city than others in NZ?
 
Pondering~~~~~

Jobs! More of them, higher

Jobs!
More of them, higher quality

In a word, jobs.    A lot of

In a word, jobs. 
 
A lot of people also grew up in Auckland so it's thier home, I'm in this category and wouldn't move to Hamilton, Tauranga, Rotorua, Taupo, etc because my family and friends are in Auckland.  I'd probably have a higher quality of life in these places but still wouldn't seriously consider a move because I'd be jobless and probably lonely. 

We will forgive you as you

We will forgive you as you don't get out much however Auckland has few world class resturants or retail outlets given it size. That has always puzzelled me.

No disposal income, just the

No disposal income, just the fruits of debt - the debt repayments - not the same as London, where many exist just to rid themselves of outrageous wads of disposal cash.

Surely if McDonald and KFC

Surely if McDonald and KFC are worldwide they must be first class?

Good questions..they will not

Good questions..they will not like the answer thou. ps ChCh is actually booming price wise currently is it a desireable city?? hmmmm My best guess is people make a place..goes for both cities.

Visited Auckland city on

Visited Auckland city on Friday to watch The Manhatten Transfer at the Civic.(great concert by the way).
Iwas amazed at the number of taxis available,the number of what seemed to be good restaraunts catering for all people but what amazed me most was the number of Asians.
All of them seemed to be on a mission and all seemed to be happy.
Compare that with other cities,no taxi's ,crappy restaraunts and hordes of young people milling around spitting and cursing and making lots of noise.
Give me Auckland anytime.

After reading these comments

After reading these comments I am so happy that no one wants to move out of Auckland. Please, please keep it that way. No offence, but south of the Bombay’s is much better off with out you lot.
 

Yeah, keep Lisa Lewis down

Yeah, keep Lisa Lewis down your way..  One thing that Hamilton can offer and Auckland can't

i love how "no offence" is

i love how "no offence" is always followed by an insult. it's the first cousin of "...and i mean that in a loving way." i'm auckland born and bred and, no offence, the only thing interesting about your statement is the use of "no offence".

And the housing

And the housing unaffordability index (median house price/median household income multiple) creeps inexorably higher up the gauge.
 
And the glacial progress in resolving the six root causes, continues - er- Glacially

  • MUL rural-urban land price multiples (see productivity Commish here - x10 for Auckland).  Unearned, lightly-or-untaxed CG for the Fortunate Few
  • LBPs, certification up the wazoo, inspections, all Good Intentions, all add $ cost layers.
  • Time delays (time=$, but Clueless Councils don't get that) which add opportunity cost/pure carrying cost
  • Materials duopoly which contributes to build and repair costs being 20-50% higher in Godzone than in Aus or US.
  • Cheap credit fuelling the raging price inferno
  • Economic bywash of sky-high new build (house plus land) prices, sideways to existing properties, which hands out an untaxed, unearned CG to every existing property-owner upon sale.

Unitary plan coming out 15

Unitary plan coming out 15 March is supposed to allow for more houses to get built, thus increasing stock/lowering prices. But it looks like it's going to include stuff like:
 
Action 16, investigate the opportunity to capture part of the windfall gain made by landowners resulting from the public decision to rezone land to urban or to substantially upzone land in order to fund infrastructure or affordable housing
 
So they will upzone your land so you can put more dwellings on it so the land cost is split amongst more houses so cheaper, and then instead of allowing that saving to be passed on (which it will be if everyone is upzoned and competing for purchasers) they will tax you more so that the dwellings aren't cheaper - just on smaller sites.
 
There's a good chance the Unitary Plan will make housing more expensive thatn ever.

I'm sad but not surprised by

I'm sad but not surprised by this info, Bob.
 
I always refer to Councils as economically clueless.  None of their policies is ever really vetted by any Dismal Scientists, and the elected members are by and large grandstanders.  The is the odd opportunity for such inpout to occur (e.g. during LTP construction) but one has to question the actual results even if the points were made.
 
They all (staff and elected representatives) just don't understand that they are now such a large part of the land development and house build process that their actions, delays, policies and fees, all influence developer, builder and financier actions, and generally in a direction which increases costs for the end consumer.
 
As a thought experiment, consider what would happen if Councils had to account for elapsed days on consents, RMA deliberations etc, plus fees incurred on both sides, at ruling IRD rates of interest and the sums involved. 
 
That would highlight the opportunity costs of:

  • adversarial processes
  • inspector and adviser bloody-mindedness
  • involvement of external consultants and advisers on either side

This would give the eventual end consumer some idea just how much economic deadweight is produced by the whole end-to-end process.
 
They (end consumers) will be Shocked, Shocked to discover what their hard-paid-for mortgage is in fact paying for.....

Waymad - I don't usually

Waymad - I don't usually consider you silly, but that's a bit of a pot and kettle there.
 
Much of the Council stuff is cost driven, and costs (as you well know, based on FF) are rising. So too is radial distance/servicing length.
 
But some of those Council costs are a direct result of every bum and his dog thinking of their house as their 'wealth'. Scared of any boat-rocking which could lower ther perceived 'wealth', they reacted like angry bulls to the leaky homes thing, and the result of the dominoes falling is more rules. The rules are a result, not a driver. 

PDK, agreed, but my reaction

PDK, agreed, but my reaction is based on the (IMHO) fairly much zero value-add from the rules in the first place:

  • watertightness:  pitched roofs, eaves, as few penetrations to roof as possible, as few tricky angles, jinks, joins etc as can be got away with in overall footprint to be covered.  See 'How Buildings Learn' (Brand) for the full list.  No need for any rules if the first eyeballing confirms:  yup, got all That.
  • fencing of sites - I'd love to see the cost/benefit here.  All cost, zero benefit. 
  • scaffolding - bendy ladders and the old conventional H-frames are all that traditional builders used for centuries.  All cost, and a massive one at that:  say $1-2K per week for a full house envelope of scaffolding, most of which slows down the job for window installers and roofers (ya just get them talkin' down the pub and ya hears it all....)
  • and so on.

The rules are driven by two aspects - LG liability aversion, and Do-Gooding intentions.
 
Neither are gonna survive in the New Order, eh?

Surely it is a good time to

Surely it is a good time to buy a house - house price increase during 2013 plus lower interest rates will mean a big equity increase. Many people who purchased a home 12 months ago with a 10% deposit will have made a 100% gain on their equity - hard to beat that.

Except that price increases

Except that price increases are restircted to good stuff in good places where rents don't cover costs. So after paying a whole lot more to top up the mortgage, paying $20k or so to sell it and paying to repair the damage the tenants do, maintenance, insurance, rates etc. you're just as likely to gain 0% on your equity - and if you do gain you will still need to pay Capital Gains Tax (which we actually already have).