Housing confidence falls sharply in ASB's latest survey

Property

More people think it's a bad time to buy a house, but they also think prices will keep rising

16th Aug 16, 5:02am by Greg Ninness

There has been a sharp downturn in confidence in the housing market, according to the latest ASB Housing Confidence Survey.

The latest survey, covering the three months to July, found that nationally only 13% of respondents thought it was a good time to buy a house, down from 17% in the survey for the three months to April.

Conversely, 33% in the latest survey thought it was a bad time to buy a house compared to 20% in the previous survey.

But the majority, (54%) thought it was neither a good nor bad time to buy or didn't know, down from 63% in the previous survey.

That gave an overall net negative sentiment of -32% across the entire country, down from -3% in the previous survey.

In Auckland people appear even more pessimistic about the market, with a net 32% thinking it was not a good time to buy a house.

The main culprit for the fall in buying confidence appears to be rising prices, with 68% of the survey's respondents expecting house prices to keep rising, up from 59% in the previous survey, while only 7% expect them to fall.

"The sharp drop in sentiment is not much of a surprise when expectations for higher house prices, as well as higher interest rates, picked up over the quarter," ASB said in its commentary on the survey.

"Sentiment has fallen sharply across the country as respondents appear to be wary about possible increases in debt servicing costs."

ASB also expects that housing confidence could become even more negative as the year progresses.

"The announcement of further investor loan-to-value restrictions by the RBNZ from October 1 could see sentiment move lower again this year," ASB said.

"The requirement for investors around the country to have a 40% deposit will undoubtedly knock investor confidence.

"However, if the new restrictions slow market activity and house price growth, potential first home buyers might look more favourably on the housing market."

To read ASB's full commentary on the survey results, click on the following link:

Housing confidence

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Source: ASB

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64 Comments

by rastus1 | 16th Aug 16, 8:18am 1471292303

..and the reason they will rise lands squarely a the feet of our Prime Minister... there is no argument.
How can we expect anything else when this maniac refuses to budge?

http://www.radionz.co.nz/news/political/311052/key-ignoring-immigration…
http://www.radionz.co.nz/news/on-the-inside/310752/the-political-risks-…

by dictator | 16th Aug 16, 8:29am 1471292980

Don't forget that he was in the financial industry and is completely clueless about money. Look at all the Government debt he has clocked up and made the situation worse with tax cuts.

by rastus1 | 16th Aug 16, 8:41am 1471293662

he's turned me from blue to a sort of greeny/red/black colour.....not sure what the final colour will be that i go with.

by CJ099 | 16th Aug 16, 8:52am 1471294366

I'd suggest going with the political party that's most likely to oust National.

by mvgsmf | 16th Aug 16, 9:20am 1471296050

@rastus

x 2........ no great alternatives but cannot abide a leader and a Govt that I've voted for but no longer puts the needs of NZ'ers first (And in fact denies there are any problems...)

And as a born and bred Aucklander I'm horrified at the change to the city in such a short time - I actually now believe it is a plan to drive NZ born Aucklander's out of their city to repopulate the regions.

Why else would you allow the insane growth from immigration in the one area. I live on the North Shore of Auckland and now am often a minority in my local neighborhoods.

And I stress - I'm well traveled, not a xenophobe and believe strongly in targeted, controlled immigration and the great differences, opportunities and hustle other cultures bring................. but this is insane.

You have to live in it to believe it.

Rampant Uncontrolled Immigration into one area is the # 1 issue for me as it creates many of the other problems we are seeing...(overloaded infrastructure and housing demand)

by rastus1 | 16th Aug 16, 9:44am 1471297477

..and its about time all the disparate groups got together as one voice over this. The Auck council should be leading the charge. Why these councillors are rolling over and not fighting back is shameful. Myabe it's time for the RSA to role out the old vets for one last fight?

by Clarence68 | 16th Aug 16, 10:02am 1471298531

Well said - couldn't have put it better myself. I am all for multiculturalism and many immigrants contribute hugely to NZ and are less likely to be out of work and draw benefits etc. But it has gone too far and it is not even great for many of the immigrants who arrive here for a better lifestyle and can't find work or affordable accomodation. The policy is treating everyone badly to supposedly grow the economy (a false economy).

by Justice | 16th Aug 16, 1:02pm 1471309361

The real problem is this. Andrew Little & Co are not prepared to do anything that will lower house prices either, in fact he has said that, so as many NZders only vote for those two delusional useless parties then what will actually change after the election?
If 'real' change is required then people better start seriously putting forth a third party that IS willing to implement solutions that will bring about house price deflation. Otherwise it's a crash and bail out scenario

by xelnaga | 16th Aug 16, 5:45pm 1471326312

They would be crucified if they said anything else.

by xelnaga | 16th Aug 16, 5:42pm 1471326159

Watch out somebody might tell on you with Susan Devoy.

by PocketAces | 16th Aug 16, 5:43pm 1471326181

What, can't she read for her own self.

by dictator | 16th Aug 16, 6:00pm 1471327214

No one wants Susan Devoy to make discriminatory comments about them as a punishment.

by NorthernLights | 17th Aug 16, 4:21pm 1471407714

Absolutely agree as a born & bred Aucklander who escaped the place 12 months ago.
All I see government minsters and the PM say is there is no problem while doing absolutely nothing to deal with the problems they claim are not there !
I think John Key can forget about his record 4th term.
I think by the sounds of things now an ant could beat him in an election

by Simon | 16th Aug 16, 1:22pm 1471310543

Another 2-3 years of double digit growth to come in regions eg Palmy. Still cheaper to own than rent with 4.2% mortgages. No Brainer

by HeavyG | 16th Aug 16, 9:46am 1471297596

It was smart politics racking up debt to support the poor and middle class (e.g. no cuts to working for families and increased benefits) while offering incentives to workers (his party base) through tax cuts.

A hardline National PM could have come in a slashed working for families and halved benefits then run a budget surplus to only end up gone after one term as the middle class rebelled.

Say all you want about Key but you have to admit he is Politically savvy as his three terms (and likely fourth) indicate.

There is no viable alternative to National.

by dictator | 16th Aug 16, 11:06am 1471302419

Smart politics where the debt will come back to haunt the country and with that $4b in interest the government is paying we're all ending up worse off. It is a matter of buying votes (and tax increases don't buy votes).

We actually need to roll National to start fixing the problems that they've created with excessive regulation and the resultant market distortions. Labour are a worthless and dying political party, National aren't that different but at least they have some vague understanding of right wing ideas. What we're probably going to end up with is NZ First gaining a lot more seats where Winston will negotiate with both sides for the best deal (for himself). It will boil down to who wants to be PM more.

by NorthernLights | 17th Aug 16, 4:27pm 1471408029

Are NZers that stupid to vote him in for a 4th term ?
Oh yeah he will be voted in again by migrants!

by DFTBA | 17th Aug 16, 4:41pm 1471408870

Are immigrants allowed to vote in general elections? Don't you at least have to have PR in order to vote?

by Tom Joad | 16th Aug 16, 8:49am 1471294171

He was a money trader. He speculated on the rise and fall of currencies. His gain was the counterpartie's loss and the bet was always a high stakes gamble.

Now, as Prime Minister, he's more than happy to turn the simple desire for Kiwi's to have a roof over their head into a similar speculative gamble. His position on this issue is irresponsible, self-serving and completely bereft of good leadership.

by mvgsmf | 16th Aug 16, 9:06am 1471295217

@ Tom Joad - pretty much nails it...

by Joe Public | 16th Aug 16, 8:54am 1471294451

Short term view like any other trader and complete disregard for long term impacts...

by skkenlee | 16th Aug 16, 9:07am 1471295274

By comparing house confidence and price, why when the house confidence downturns, house price upturns?

by NorthernLights | 17th Aug 16, 4:30pm 1471408250

Downturn in confidence to buy a house is merely an indication of the steps that will soon follow a flattening of the market and that is as far as I will speculate at this stage.

by Brendon | 16th Aug 16, 9:13am 1471295625

It will be interesting if the public changes it's house price expectations downwards now the unitary plan is in place. Penny Hulse and Nick Smith thinks the Unitary Plan will put downward pressure on prices. But there are dissenting economists and others who give good reasons why it will not.

by Nimbo | 16th Aug 16, 11:34am 1471304099

Give it a month or so and every land banker for the last 3 years will be submitting their resource consent application to sub divide into 200m2 sections. Here's an example of potential 4 sections at under 200k each http://www.realestate.co.nz/2870890.

Get a nice modular home delivered from China for 200k. Check out http://www.ecotechhomes.co.nz/design_options.html. The 2 Brm 2 Bth goes 143K delivered to a NZ port. They only take a week to assemble on site and arrive in a container.

You should be able to get a new stand alone 2 BRM home in Mt Roskil 350k + a developers margin. 10% deposit too. House prices are only going one way once this starts. The value of central land will go up though expect the Opposite in in suburbs far away from the city center. Once you start adding apartments and terraced housing into this, I am sure the ACC will hit their average house price target.

by sadr001 | 16th Aug 16, 11:52am 1471305155

A1 homes sells kitsets for $90,000 that cost close to 200,00 built on a flat section excluding development contribution, consents and services (circa $120,000). I suspect that once you factor all the other non land costs into your modular house you'll find that $ 300,000 is as low as turnkey prices will go if you have any sort of gradient at all on your land (most of Auckland does). Add the value of the land underneath that and you've got $650,000 basic homes on tiny sections.

by Nimbo | 16th Aug 16, 12:47pm 1471308440

Lets get some numbers into this and see where it comes out. Based on the examples above
700K for the section
60K for development costs (20K each based on the smaller footprint and the need for 3 new sections)
40K for Water connection
30K for consents
20K for electricity connections
50K for builders (2 builders for 8 weeks based on 1 week for piles and 1 week to put up the house)
10K to move the containers from port to Mt Roskill
572K for 4 new 2brm houses shipped from China (@143K each)

A total of $1.48 mil or $370K each property

by Zachary Smith | 16th Aug 16, 1:05pm 1471309548

I don't think people are going to be too keen to buy Chinese kit set homes

by Nimbo | 16th Aug 16, 1:13pm 1471310005

The example modular houses are from a NZ company which manufactures out of China. Most of the designs come with a MultiProof Certificate from the New Zealand Department of Building and Housing - http://www.ecotechhomes.co.nz/upload/cert.jpg

by sadr001 | 17th Aug 16, 9:44am 1471383865

I think that you'll find that most of your listed costs are too low and or need to be multiplied by the number of units. For example, the infrastructure development levy alone for a new water connection is $13,000 per new dwelling. This excludes the actual water meter which costs $1,200 each and pipe works / admin / engineering / reporting. I'd budget 20,000 - 22,000 per dwelling for water. https://www.watercare.co.nz/SiteCollectionDocuments/AllPDFs/Domestic_Ch…

Your 30k for consents might just be building consents? based on what I've been told just the development / intensification levy per additional dwelling when a resource consent is required can be over 30,000 (over 30,000 per dwelling!!!!!) and that is just 1 of the things you need before you can get a resource consent.

Where have you been able to find a level section capable of fitting 4 houses that meet the 6 meter outlook requirements for $700,000? My site in Mt Roskill is worth close to 800,000 and it can fit only 3 dwellings comfortably (it also has a pretty intense gradient that means that a lot of earthworks will be required. (The costs associated with a resource consent have me seriously considering just building 2 dwellings instead of 3)

by Brendon | 16th Aug 16, 12:29pm 1471307344

Read the report me and David Lupton wrote in the weekend. There is plenty of reasons why this limited amount of development potential will not be provided in the short term at knocked down prices. The major one being land banking. Much like the special housing areas being a moderately big increase in potential supply that did not have the expected decrease in price due to land banking I cannot see why the same will not happen again. The Unitary Plan is just a moderately less restrictive District Plan. Why do we expect a different result when we keep doing the same thing.

by Nimbo | 16th Aug 16, 1:09pm 1471309783

Under the previous rules the example property would only have been allowed to divide into 2 sections.

Under the new rules you could divide this into 4 sections with single level dwellings.

by sadr001 | 17th Aug 16, 9:48am 1471384117

The council has voted to require resource consents for 3 or more dwellings.

by CJ099 | 16th Aug 16, 9:18am 1471295908

I think this says it all; Generation Squeeze, http://www.gensqueeze.ca/join?splash=1

Which is a campaign formed by the Canadians to basically highlight how wage stagnation, high cost of housing, high cost of education and high immigration (Not to mention Foreign Investors) are forcing out young from their popular cities.

I'd really like to see the Kiwi equivalent as I'm sure we're (Auckland) is in a similar situation if not worse!
http://www.news1130.com/2016/05/25/code-red-campaign-focuses-on-broken-…

And when you have no young people in your cities due to being priced out, this starts to cripple a cities infrastructure. And you won't be able to attract skilled quality migrants either, so who do you expect to be able to pay the rent??

Or is Auckland destined to become just a huge retirement home?

by rastus1 | 16th Aug 16, 9:51am 1471297860

Auckland is to become an outpost for China. Anyone who cannot see that is blind. Expansion south china seas, into the pacific, down to NZ. Then Aus is encircled and they have access to NZ resources, the fisheries and a launch pad to that last decent fishery, the Antarctic.

"Western and Central Pacific Fisheries Commission data shows 68 per cent of the 480 registered longliners are Chinese. Most of the rest, flying Pacific flags, are Chinese-owned. Twenty-one per cent of the Pacific purse seiners are Chinese and their numbers are growing rapidly. You can buy them on Alibaba.com"

http://thespinoff.co.nz/featured/30-03-2016/how-chinas-illegal-fishing-…

by CJ099 | 16th Aug 16, 10:34am 1471300459

@ rastus: Yes I very much agree, this is why I'm really worried for New Zealand. Since we're being sold off wholesale to foreign investors. I'm really worried how this is going to effect New Zealand's long term future?

China does not have a good track record of how it looks after natrual environments and seems to have little regard of it's impact on other nations in the pursuit of money. Remember it is ranked as being highly corrupt country according to Transparency International.

Even if you look at the global impact China has on Fisheries Industry alone it really make you wonder.

Herald article: Chinese illegally fishing near NZ: http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11687456

BBC article: Why are Chinese fishermen destroying coral reefs in the South China Sea? http://www.bbc.com/news/magazine-35106631

BBC article: How China's trawlers are emptying Guinea's oceans: http://www.bbc.com/news/world-africa-36734578

Huffington Post: Chinese Illegal Fishing Threatens World Waters
http://www.huffingtonpost.com/asiatoday/chinese-illegal-fishing-t_b_104…

by Ms de Meanour | 17th Aug 16, 4:52pm 1471409536

New Zealand's environmental laws apply to all land in New Zealand, regardless of who owns it.

by DFTBA | 17th Aug 16, 5:33pm 1471412032

they don't if you have enough money.
.
those cows which were pictured last summer bathing in the lake? Nothing happened with that...
if you are rich enough and have enough clout, you don't get fined, and you can apply for as many resource consents as you like (and then go beyond them and apply for added consent retrospectively)

by SmoKey | 16th Aug 16, 12:09pm 1471306186

NZ is just the largest Island chain (anagram for China ?)in the South Pacific. Any surprise that China views NZ as one more island to play in, just like the other islands in that area ?

by Smalltown | 16th Aug 16, 9:15pm 1471338947

They might as well add us to their 9 dash line - it would be just as valid as what they are claiming at the moment.

by NorthernLights | 17th Aug 16, 4:45pm 1471409107

Canada is doing exactly what John Key has done IMPORT MORE CHINESE
Canada are doubling the number of immigration offices in CHINA from 5 to 10
Justin Trudeau has meetings in China to get more Chinese to Canada as it is an aging population LIKE NZ
Difference is NZ can fit into Canada 34X

by keyo_ | 16th Aug 16, 9:28am 1471296505

by Chris-M | 16th Aug 16, 10:38am 1471300696

So people have no wish to buy a home under these conditions, but believe that things are going to get worse. Sounds like they are giving up and I wonder how long it will be before this turns to anger and rage.

by Clarence68 | 16th Aug 16, 10:05am 1471298756

There's heaps of anger and rage but obviously slightly more happy rich home owners unfortunately. That can't last forever though.

by moa man | 16th Aug 16, 10:38pm 1471343919

But you can't complain.
Citizens of this country can't anyway.
It is verboten to speak ill of immigrants.
The thought police will nail you to a wall, and hit you with a squash racket.

by zorro15 | 16th Aug 16, 11:02am 1471302127

Survey does not make sense. Surely if you think house prices are going to appreciate it would be a good time to buy now. If you think house prices are going to fall, now would not be a good time to buy.

by dictator | 16th Aug 16, 11:11am 1471302713

That's what you see in the result. A small number think it's a good time to buy. About 2.5 times that number of people think it's a bad time to buy. It's just a survey and doesn't go into why they have that opinion. Anyone who can't afford to buy a house in a realistic time frame will think it's a bad time to buy though.

It's a bad time to buy in London as house prices there have been falling for 6 months. Of course most people probably can't afford a house in London anyway.

by buzby | 16th Aug 16, 11:22am 1471303338

I am just one person but I would like to buy a house for my long term security but I am not going to now. I believe that, even though house prices will continue to rise, they will eventually fall to the long term trend line when economic conditions change. So now is not a good time to buy as houses are selling for more than their long term value.

by dictator | 16th Aug 16, 11:31am 1471303895

The other thing to consider is that if you had a mortgage in this environment the cashflow going to mortgage payments is a more than just paying rent. It can make a large difference to someone's budget. It's good to make the decision with financial issues considered properly.

by Boatman | 16th Aug 16, 2:19pm 1471313992

Many Kiwi's are just plain idiots .....blaming John Key for the housing bubble is just dumb and without any substance whatsoever .

Why not blame The Pope or the good Lord himself ?

There is nothing Key , the Pope or the good Lord ( or Mr Wheeler ) could have done about this that will have made any meaningful difference whatsoever

The fact is that the Worlds QE, Money printing and zero interest rates has so spectacularly undermined devalued the value of money , it has sent all cash straight into alternative assets such as stocks , shares and property .

The rise in asset prices has defied all logic , and even in Turkey , Russia and Brazil with all their problems their stock markets and property markets are flying

Our problem here is that the housing market has a good dollop of icing on top in the form of 150,000 or so migrants in the past 36 months .

For that I do blame John Key , but the cause and effect between house prices and migrants is not a perfect correlation .

Capital gains tax would have made no difference at all ......... look at Sydney and Vancouver price increases , where we Kiwis could not afford a bedsit when compared to what we pay in Auckland

I also blame our Mayor who should have kept his zipper closed and stayed focussed on the real problems of proper town planning and land availability in Auckland

by xelnaga | 16th Aug 16, 6:03pm 1471327405

For "the" housing bubble?

According to the leader of the country there is NO housing bubble. Or crisis. It's a mere "challenge". The problem starts right there.

Being a National apologist is only going to get harder as the anger boils over.

by CJ099 | 16th Aug 16, 7:45pm 1471333545

@ Boatman - So what's the alternative? Stick with National and continue to sell our land, culture and quality of life sold off bit by bit until there's nothing left to sell? Where do we and our children run to then?

by nzjohnnz | 16th Aug 16, 2:39pm 1471315188

So many comments against National Government but I guess this is the mood of the nation. After all what do you expect from a forex trader - the mind set is not that of a leader but someone who enjoy speculation as that is where the big money is and with this mind set if we voted for national, we were wrong.

We should blame ourselves and decide that will not repeat this Blunder - Never.

by Kakapo | 16th Aug 16, 6:10pm 1471327851

This afternoon I spent an instructive few minutes eavesdropping on a group of well-dressed boomer dudes. Subject of their conversation was that they'd long been National supporters, but never again.

by Guido | 16th Aug 16, 9:23pm 1471339430

Yet National is 47% in the polls. When those boomers are alone in the ballet booth, and they don’t have to justify it to anybody, they may be counting the gains in work free-tax free-property inflation, and secretly ticking for their easy money.

by reena | 16th Aug 16, 6:15pm 1471328102

Thanks John Key.

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11695…

by Boatman | 16th Aug 16, 8:23pm 1471335780

So everyone blames John Key , what could he have done differently that would actually have the desired effect ?

by steven | 16th Aug 16, 8:41pm 1471336872

a) not given tax cuts in 2008/2009 to start with.
b) cut immigration in half.
c) actually take a beginners class on Minsky and Keynesian economics. I reckon a few days with Steve Keen would have clarified just why we are not growing despite the low OCR.
d) After that a class with Chris Martenson on Peak oil.

by CJ099 | 16th Aug 16, 8:52pm 1471337555

Answer: Considering the New Zealand citizens rights first! Before selling off all their land and homes tax free without any consideration for the impact on future generations. And then denying it ever happened by pretending the housing crisis never existed.

Oh and lets not forget the sky high NZD which we have no control over (Since our housing market is out of control), that is currently killing our export economy. We are an export nation or at least we were once.

by DFTBA | 17th Aug 16, 5:13pm 1471410782

I'm actually surprised people are surprised at the current state of affairs.
.
Of course a right wing government ends in tears: it always does. The right wing ideology is to
1) cut taxes (which always benefits higher earners over low earners),
2) make life easy for corporates (who, as has been shown, just pocket the money and stash it off shore)
3) loosen regulations (RMA. LGA)
4) cut public spending (schools, hospitals, public transport)

The result of which will always be a trickle up from the poo to the wealthy. The rampant neoliberal ideology and unfettered markets which we've had for the past 30 years, have largely eroded a lot of the middle class. Which means that those who thought a right wing government would benefit them, are now starting to feel the pinch.
Sucks, doesn't it?
But why is everybody so "OMG I can't believe he did this"?
Of course he did this, he said he was going to do it, it's the nature of the beast....a

by xelnaga | 16th Aug 16, 10:06pm 1471341985

@Boatman

Restrict the purchase of residential property to citizens and permanent residents only.
Comprehensive capital gains tax on property speculation.
Remove tax subsidies (negative gearing) for property investors.
Remove the buy a 1.5M house, get a visa for New Zealand scheme.
Limit net migration to sustainable levels.
Measures to discourage land banking.
Government directly intervening to get houses built.
Remove rent subsidies and house buyer subsidies.

I mean seriously, you've been reading these forums for years. I remember you having a tanty at me just before the last election when I suggested that voting National in again was a really stupid idea re: housing. It has all come to pass of course.

Have you paid attention to anything at all?

by Undecided_Voter | 16th Aug 16, 9:46pm 1471340796

He has but he isn't paid to give that opinion.

by DFTBA | 17th Aug 16, 5:24pm 1471411486

Yup, my sentiments exactly about the warming about voting national in for the 3rd term.....see my post above.
.

by SmoKey | 17th Aug 16, 11:01am 1471388508

The problem is known, the solutions are known..and the Political will won't be there for quite some time to come.
Let us get on with buying more houses and making money while the sun shines...right ?