sign up log in
Want to go ad-free? Find out how, here.

ASB's Housing Confidence Survey heads skyward. Chief economist warns borrowers to expect new mortgage lending restrictions

Property
ASB's Housing Confidence Survey heads skyward. Chief economist warns borrowers to expect new mortgage lending restrictions
<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

More people think house prices will rise over the next year while fewer people think interest rates will increase, according to the latest ASB Housing Confidence Survey.

The survey for the three months to December, found that a net 59% of respondents believe house prices will increase this year, up from 48% in the last survey - for the three months to October.

In the Auckland region housing confidence was even stronger, with a net 68% of respondents believing prices would keep rising this year.

However only a net 34% of respondents believed interest rates would rise this year, down from 55% in the third quarter of last year.

But in spite of rising prices, more people believe it's a bad time to buy a house than believe it's a good time.

Nationally, a net 6% of respondents thought it was a bad time to buy a house, while in Auckland a net 15% thought it was bad time to buy and in Canterbury a net 16% thought it was a bad time to buy.

ASB chief economist Nick Tuffley said low interest rates remained a key driver of housing market sentiment.

"Despite the RBNZ's OCR hikes last year, fixed term mortgage rates have been held down and at times even dipped, as global interest rates declined," he said.

"Bank competition has added further fuel to the expectation of a lowering of interest rates. And with the RBNZ now signalling that the OCR could remain on hold for an extended period of time, interest rates remain a key factor in influencing sentiment about the housing market."

Tuffley said high demand and low listing numbers had re-accelerated prices in Auckland, creating a near perfect storm for housing affordability.

"Looking at the ratio of regional house prices relative to incomes, or mortgage payments for first home buyers, Auckland is standing out as looking quite stretched compared to the rest of the country."

He said that with broader inflation pressures very low, the Reserve Bank was unlikely to lift interest rates in the foreseeable future.

"With the OCR on hold, the only option the RBNZ may have to address the housing market is the use of further macro-prudential tools.

"At this stage, it's increasingly likely that the current loan-to-valuation ratio restrictions will remain in place for longer than we originally anticipated. We think late 2015 will be the earliest the RBNZ could remove the restrictions.

"Buyers should also be prepared for further measures - whether directly targeted at property investors, such as increasing the capital banks have to hold against large scale investors, or more general, such as debt servicing limits."

Here's ASB's full survey.

---------------------------------------------------------------------------------------------------------------------------------------

Our free Property email newsletter brings you all the stories about residential and commercial property and the forces that move these huge markets. Sign up here.

To subscribe to our Property newsletter, enter your email address here. It's free.

Email:  

----------------------------------------------------------------------------------------------------------------------------------------

Housing confidence

Select chart tabs

Source: ASB
Source: ASB

We welcome your comments below. If you are not already registered, please register to comment.

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.