Fearless in face of housing crash

A large majority of people do not fear a crash in property prices, at least in the short term.

A survey by the Property Institute of New Zealand, the body representing valuers and other property professionals, found 56 per cent believed house prices would rise in the next six months.

Only 8 per cent were picking a drop, and 28 per cent felt they would stay the same.

The survey also found foreign investors were viewed as the largest influence on house prices.

The institute’s chief executive, Ashley Church, says it commissioned the poll to get a better feel for public perceptions about property.

‘‘While people seem to differ on the causes, a significant proportion of them aren’t buying recent talk of an imminent crash and the large majority of people also share our view that a sharp price correction in the housing market is unlikely.

‘‘That would tend to confirm our view that the current price slowdown in the Auckland property market is being driven by the Reserve Bank’s LVR [loan-tovalue ratio] restrictions, rather than any loss of confidence in the Auckland market.’’

In the main centres, the belief that property prices would still rise for a few months was highest in Wellington at 62 per cent, followed closely by Aucklanders at 58 per cent.

Forty-six per cent of Christchurch residents were positive but another 40 per cent felt prices were levelling out.

Optimism was also high in the provinces. In smaller cities, those positive about price rises were 57 per cent, in towns 53 per cent, and in rural areas 54 per cent.

The belief that prices would drop was strongest in the towns (10 per cent), followed by Auckland (9 per cent), provincial cities (8 per cent) and rural areas (8 per cent).

The survey also measured the perceived impact on house prices of five factors: foreign investors, local investors, immigrants, central and local government and banks.

On a scale of zero to 10, with zero representing no impact, foreign investors were viewed as having the largest impact with a rating of 7.

Banks came in at 6.2 and domestic investors at 6, while immigrants were 5.6 and government red tape was at 5.3.

The view was held widely, except for Green Party supporters who believed the banks were having the same impact as foreign investors.

Church was surprised by the ‘‘unexpectedly broad view’’ that foreign investors were playing a big role in property prices but said the perceptions should not be ignored.

‘‘The views expressed in the survey aren’t necessarily right – but they’re an important barometer of market sentiment and a guide to buyer behaviour.’’

"The large majority of people also share our view that a sharp price correction in the housing market is unlikely."