Confidence builds among buyers as price rises slow

Hayley Ludgate says now is a good time to buy a property – provided you do not overextend yourself.

She and her husband, aged 21 and 23 respectively, recently sold their first house in Whangarei and bought a piece of land in Kamo to build on.

Price rises seemed to have slowed, she said.

The couple were not actively looking for land but a block came on to the market near her family farm.

‘‘We missed out on a multi offer for that. While we were looking at it, we had a guy from [construction company] Homeworld look at it.

‘‘He later contacted us about the Kamo block, so it was actually never listed. Real estate agents said we wouldn’t find a block anywhere around Whangarei for under $200,000, well, we got ours for much less than that.’’

She said they made a bit of money on the sale of their first house – enough to cover the 10 per cent deposit needed on the construction loan deposit and pay off some debt.

More buyers are likely to decide they share her sentiments over the coming months, ASB’S chief economist says.

The bank has released its latest Housing Confidence Survey, which shows a net 17 per cent of people think it is a bad time to buy a house.

A reading of zero would indicate that as many people thought it was a good time as thought it was bad.

In October, a net 26 per cent said it was a bad time to buy, the most negative reading on record.

A net 46 per cent of people expect house prices to continue to rise, compared to 58 per cent the previous quarter.

ASB chief economist Nick Tuffley said the survey findings corresponded with a significant drop in housing market activity following the Reserve Bank’s latest investor-focussed loan-tovalue ratio restrictions.

‘‘Not only has housing market data shown a fall in sales activity recently, it has also suggested house price growth has slowed in a number of regions,’’ he said.

‘‘It is likely that the weaker market activity has impacted on respondents’ house price expectations this quarter.’’

He said buyers tended to think it was the worst time to buy when the market was hot and there was a lot of competition. As price rises became more modest and the time it took to sell increased, it could be expected that people would start to report that it was a better time to buy.

‘‘In Auckland, where the sentiment is the weakest, there’s scope to improve. But you’re still going to find, until the housing crisis is solved a bit more, some challenges. The encouraging thing is the number of houses available for sale in Auckland has started to creep up, there’s more supply and sales turnover has slowed as well.’’

He said the times when people were sure it was a good chance to buy tended to be in the middle of a downturn when there was little competition.

‘‘Elevated house prices are likely to still be weighing on sentiment, as are the higher deposit requirements now facing investors in particular,’’ he said.

‘‘On balance, respondents see it as a bad time to buy, but are slightly less pessimistic than three months ago.’’