Confidence among home buyers drifted lower in an ASB survey for the three months to October, but ASB's economists still expect house prices to firm 3% nationally in the year ahead as housing supplies remained contrained in Auckland and Christchurch in particular.
The ASB Housing Confidence Index (chart below) recorded a one point drop over the last quarter. A net 24 percent of respondents said they felt now is a good time to buy a house, compared to 25 percent in the previous quarter. The historical average is a net 22 percent.
ASB chief economist Nick Tuffley said the outlook was slightly more optimistic for earthquake embattled Canterbury given reconstruction efforts ahead.
A net 43 percent of those surveyed in Christchurch expect house prices will rise, compared to just over a net third of respondents in Auckland and net 22 percent across New Zealand, the survey reports.
"This suggests underlying housing demand in the Canterbury region is recovering from impacts of the earthquakes. We expect Government and insurance payouts will support a continued recovery in house sales in the region as households relocate over the coming year,” said Tuffley.
Despite expectations of a price pick-up, perceptions of the current market in Christchurch are gloomy, noted Tuffley.
“A negative six percent of respondents in Christchurch thought now was a good time to buy a house – compared to a positive net 24 percent across New Zealand as a whole, reflecting the issues still faced by the region.''
The view captured on interest rates in the confidence survey travelled up and down over the period.
While a net 57 percent of respondents now expect interest rates to rise, up from a net 46 percent in the July quarter, Tuffley said a month by month break down showed a steady decline in interest rate expectations over the quarter, "reflecting the deterioration in global market conditions over this period."
Overall, the housing market still looks to be constrained by supply with new house listings continuing to decline. This is especially the case in Auckland where scarcity is underpinning house price growth most prominently.