Market edges closer to a buyer’s
HOUSEPRICE growth may have peaked across much of the country as the housing market edges closer to becoming a ‘‘buyer’s market’’, ASB chief economist Nick Tuffley says.
While house prices in many areas around the country are 40% to 70% higher than in 2007, annual gains are generally at 10% or less, while quarterly price growth has eased to mainly singledigit gains in many places.
The gap has closed between the number of respondents to the ASB’s quarterly housing confidence survey who think it is a good time to buy and those thinking it is a bad time to buy — making it a buyer’s market against the recent longrun seller’s market.
‘‘This trend was reflected across all regions and reinforces our view that houseprice growth across much of New Zealand has peaked,’’ Mr Tuffley said.
For the three months to October, the number of people in the survey who believed it was a good time to buy rose from 14% in the previous quarter to 16%, while those thinking it was a bad time to buy stayed steady on 19%.
‘‘The combination of slowing house price growth across much of the country, more homes to choose from and a favourable interestrate outlook is likely underpinning the increase in the number of respondents who think it’s a good time to buy a house,’’ Mr Tuffley said.
Of those surveyed, 51% said it was neither good nor bad, while the 14% balance indicated ‘‘don’t know’’.
Mr Tuffley said that, overall, people’s views were still pessimistic, but it was ‘‘just a handful’’ more who believed it a bad time to buy.
‘‘The proportion thinking it’s a good time to buy reached the highest level since April 2016,’’ he said.
There is also an impetus of expectations mortgage interest rates will go lower, albeit among a minority of the survey respondents.
Last week, the Reserve Bank indicated a lesser likelihood of a cut to the interestdriving official cash rate, which has been at a record low of 1.75% for two years.
Mr Tuffley said an increasing number of survey respondents had expectations of lower mortgage interest rates, which were likely to have been shaped by falling fixed mortgage rates and expectations the central bank would leave the OCR on hold for longer.
The Reserve Bank indicated no OCR changes though to early to mid2020, and economists also are not expecting a change until then.
While the majority of respondents still expected higher interest rates, that had fallen from 37% in the previous quarter to 33%.
Those expecting lower interest rates increased from 6% to 7%.
‘‘The 7% who expect mortgage rates to fall in the next 12 months was the highest number in two years,’’ Mr Tuffley said.
Since August, bank mortgage interest rates had fallen across most fixed terms.
‘‘With question marks over the New Zealand growth outlook and the implications of slower growth on inflation, many commentators are suggesting the OCR is likely to be low for longer,’’ he said.