In what ASB economists describe as "an important watershed", for the first time in 18 months, more Kiwis are expecting house prices to rise than fall.
In the ASB's latest quarterly Housing Confidence Survey, ASB economist Nat Keall says a net 34% of New Zealanders expect housing prices to rise from here.
That's up from a net -8% reading in the previous survey and a net -43% reading - IE a net 43% expected falling prices - at the start of the year.
"...This is the first time since April 2022 that those expecting prices to rise has outstripped those expecting them to decrease - an important milestone," Keall said.
"With recent data generally showing prices no longer falling, Kiwis tend to think the housing market has reached a turning point. We agree, though there is plenty of uncertainty in terms of how strong the recovery will be," he said.
"Aucklanders continue to be the most bullish in their house price expectations, in a continuation of the theme we saw last quarter. That remains unsurprising, given housing market activity has recovered a little bit more swiftly than elsewhere in Godzone. That said, this quarter’s shift is very much a national story."
Keall said with net migration proving extremely strong and housing inventory stabilising, the main constraint on the housing market at the moment is the high level of mortgage rates.
"Kiwis don’t seem to anticipate much of a shift on that front just yet. While the net balance of respondents expecting further interest rate increases has shrunk a bit, that looks to have largely been driven by an increase in the number of people expecting rates to stay the same, rather than increase. Just 15% expect much of a fall in interest rates in the near-term. Again, we largely agree."
Keall said Kiwis are still split on whether now is a ‘good’ time to buy.
"Our poll took place at a time of heightened uncertainty, with the election campaign in full swing and the parties setting out their housing market policies. With the tax and regulatory landscape coming into clearer focus, we’ll soon get a better steer on how Kiwis are likely to respond."
ASB economists agree that prices will rise from here, though they expect this house price uptick to be slower than the last one.
"Housing market activity measures appear to be lifting slowly off a fairly low baseline, despite a recent pause over the election campaign. Housing demand has had a big boost from stronger net migration and supply isn’t keeping pace. On the other hand, interest rates are still in deeply restrictive territory, acting as a major constraint on activity," Keall said.
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