Housing confidence softens in ASB survey ahead of OCR hike, May 20 budget

Housing confidence softens in ASB survey ahead of OCR hike, May 20 budget
The ASB Housing Confidence Survey for the three months to January has found the resurgence of housing confidence last year has abated slightly in 2010 as investors focused on the upcoming increase in the Reserve Bank's Official Cash Rate and uncertainty over property taxes. "Despite some reduction in the favourable tailwinds for property, house price expectations remained firm over the quarter," ASB said. The survey found 50% of those surveyed believed now was a good time to buy property, down from 59% previously. The survey found awareness about  the RBNZ's  "middle of the year" timing for a hike in the Official Cash Rate and uncertainty around tax policy changes was likely to weigh on the house market until details were announced in the May 20 Budget. "Real estate agents have also recently noted increased uncertainty within the market following the Tax Working Group's (TWG) recommendation to Government to change the tax treatment around housing investment. The Government has indicated that it is ruling out recommended measures such as capital gains tax or land tax. However, we do expect the Government will make some changes to the tax treatment of property." The survey found regional differences with Auckland price expectations rising steadily over the quarter while regional price expectations were subdued. "The pattern over the three-month period was for Aucklanders to become increasingly more optimistic about the house price outlook, while respondents in the rest of the North Island and in the South Island started to become more cautious about the outlook as the quarter progressed." See the full release here

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