House-buyer confidence improves

New Zealanders tend to say they think it’s a good time to buy a property just at the times when more are sitting on their hands – and that it’s a bad time when more people are rushing to buy.

ASB’s latest housing confidence survey shows we’re still thinking one thing and doing another.

It reveals that the number of people who think now is a bad time to buy a house has dropped, to a net 7 per cent, from minus 11 per cent the previous quarter.

A reading of zero would indicate that as many people think now is a good time to buy as think it is not.

A net 11 per cent said it was not a good time to buy a house in the North Island outside Auckland.

In Auckland, a net 4 per cent said it was not a good time to buy. That is the most positive reading for Auckland since 2013.

But although perceptions are improving, the number of house sales dropped last year by 15.7 per cent nationwide, according to the Real Estate Institute.

ASB chief economist Nick Tuffley said that was typical buyer behaviour. During boom times, the survey tended to show that people had high expectations for the direction of prices, and thought it was a bad time to buy.

‘‘Yet that’s when turnover is strong. When they think it’s a good time to buy activity is actually weak,’’ Tuffley said.

The latest survey shows clear regional differences in perceptions of the market.

Price expectations in the South Island have lifted. In Canterbury, a net 11 per cent expect prices to rise, up from 8 per cent previously.

Across the rest of the South Island, 30 per cent expect a price rise. Just a net 8 per cent expect an Auckland increase.

Tuffley said that was representative of the market in each area.

‘‘Price expectations have fallen to an eight-year low in Auckland as we continue to see the Reserve Bank of New Zealand’s speed limits taking effect.’’

Annual price growth rates have slowed sharply in North Island centres such as Auckland, Tauranga and Hamilton.

But price growth rates remain at about 10 per cent per annum in the South Island beyond Canterbury, where prices have been flat but are starting to pick up.

Tuffley said it was a lot easier to buy a house in the current market. But he said people would no longer buy expecting significant capital gains in the near term.

Despite the lift in overall sentiment, upcoming housing policy changes might still dampen house price expectations, he said.

‘‘There is a degree of uncertainty around the potential impact of policy changes so investors and homeowners are likely to remain cautious and not rush into any major decisions. The market will continue to be constrained by population growth and low housing supply for some time.’’

Most respondents expected interest rates to rise over the next 12 months, but had less conviction than in previous surveys.

Tuffley said muted inflation pressures pushed out ASB’s forecast for Reserve Bank rate hikes.

‘‘We now expect the RBNZ to start lifting the official cash rate in August 2019, though in the meantime offshore interest rate increases could see mortgage rates start to creep up.’’