Expectations of a rising house market are soaring, according to results from the Reserve Bank's latest quarterly household expectations survey out today.
The February results for the survey show that a net 74.3% of respondents expect higher house prices in a year. This has surged from 64.4% in the last survey in November.
The latest figure is much the highest in a survey that has only been running since May 2011. The results in that very first survey showed, for example that then just 34.1% of households expected prices to rise.
Similarly the expectation for mean house price inflation in a year's time is at record levels, with an expected house price inflation rate of 4.7%, up from 4.1% in November.
All this is potentially not good news for the Reserve Bank. However, the news is rather more benign on household views of overall inflation. The median expected inflation rate in 12 months time is 3%, which is unchanged over the past year. Expectations of inflation five years out have taken an upturn, however, with a median rate of 3.4% expected, up from 3% in November, but down on 3.8% as of last August.
Actual inflation as measured by the Consumer Price Index in the year to December was 0.9%
The RBNZ's survey of business expectations, also out today, showed conversely a fall in inflation expectations from business leaders. Firms have a median expectation of 1.7% inflation a year out, compared with 1.8% in November. Similarly, median expectations for two years out have dropped to 2.2% from 2.3%.
Monetary conditions were perceived by businesses to be "easy" and expected to remain that way in the next year.
Expectations of economic growth are strengthening, with the GDP tipped to grow by 2.3% in the next year, compared with an expected growth of just 2.1% in the last survey. The latest Statistics New Zealand data indicates real production-based GDP increased by 2% between September 2011 and September 2012. Positive quarterly growth of 0.5% is expected by survey respondents for both the December 2012 and March 2013 quarters.
While there have been a wave of recent redundancies, businesses do see unemployment gradually falling, with an expectation that the unemployment rate will be 6.7% in a year (down from 6.8% in the previous survey). The actual rate in December was measured as 6.9%
Expectations for interest rates are now slightly edging up. The key 90-day bank bill rate is expected to be 2.7% by the end of March (around the levels at the time the survey was conducted), rising to 2.9% in December.
The RBNZ's Official Cash Rate stands at 2.5%. The move up in expectations for the 90-day bill rate suggests more businesses are now expecting the RBNZ to start lifting official rates before the end of the year.
14 Comments
Gareth, the "cat exterminator" will not be pleased.
He wants people to invest in his Mickey Duck funds scheme instead of standing on their own feet
Do people really believe that this guy really gives a rats backside about cats?.
All he wanted was publicity and cat extermination was bound to get headlines.
Wait for his next loony idea- no doubt it will soon be coming.
Clever PR maybe, but utterly stupid nevertheless.
The property market is approaching a new normal, and people better suck it up - or miss out.
The cards are stacked very favourably for property so of course the expectation will be high that prices are going to increase. The market is not efficient and is severely distorted.
Xingmo - Mainstream NZ has long ago dismissed agriculture and exports as being important. They think they have created their own economy of consumption as that is what the Government measures.
There is a growing awareness that the Unitary Plan draft being released next month probably isn't going to allow affordable housing - even though that's one of it's major purposes (and it easily could if written properly).
Instead it's starting to include stuff like increasing development taxes on property that's upzoned (so that it can't have affordable housing - in order to pay for affordable housing WTF???) and new 'betterment levies'
Rather than zoning for affordable housing everywhere it's heading towards 'inclusionary zoning' whereby everyones housing is more expensive to subsidise affordable housing for a few - what a load of rubbish.
Now we have Bill English indicating they will require home owners to have a larger deposit to curb the soaring housing market. Again the Government is treating the sympton, not the cause. Get out the banD aid Bill, because what you are promoting wont happen. You cannot , and will not regulate the banks, because it will be the Governments downfall. You belong with Dorothy in Kansas, not the Back Bencher Pub!
"Rising rents and fewer rental properties are pushing Christchurch's strugglers into inferior housing." press
And maybe...just maybe the next generation will learn from this, that popping out sprogs and criminal activity, do not make for good housing.
But not Labour no way...they want to convince the next generation that support for Labour leads to easy access to rentals and even spanking new govt housing...regardless of the sprog production and criminal activity....all paid for through thieving by govt from other people.
Have this with your coffee this morning...read it alongside the BS about property in NZ...!
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