Now not a good time to buy
More New Zealanders have decided now is not the right time to buy a house.
ASB has issued its latest Housing Confidence Survey which shows a sharp drop in the number of people who think it’s a good time to buy property.
A net 20 per cent of respondents said it is a bad time to buy. This compares to the net three per cent last quarter, and is the weakest sentiment since early 2012.
A reading of zero per cent would indicate that the number of people who thought it was a good time, and the number who thought it was a bad time to buy, were equally split.
ASB chief economist Nick Tuffley says the sharp fall in sentiment was not surprising when expectations for higher house prices, as well as higher interest rates, picked up over the quarter.
Further investor loan-to-value restrictions could see it drop further this year.
But if the new restrictions do slow market activity and house price growth, potential first-home buyers might look more favourably on the housing market.
A further official cash rate cut this year could have a similar effect, provided mortgage rates move slightly lower in response.
‘‘On balance though, high house prices and a higher deposit
‘‘People appear to be wary of higher debt servicing costs on top of already-high house prices’’
Nick Tuffley
threshold for investors are likely to weigh on sentiment this year,’’ he said.
Nationally, sentiment is at its lowest level since early 2012, and it’s the first quarter since mid-2014 where every region has thought it was a bad time to buy.
Sentiment is particularly low in Auckland, where a net 32 per cent think now is a bad time to buy.
‘‘As affordability in Auckland is squeezed more so than elsewhere, we expect to see sentiment continue to drag relative to the rest of the country,’’ Tuffley says.
But despite the drop in purchasing sentiment, it appears New Zealanders still believe house prices are only heading up.
Nationally, 68 per cent of respondents expect higher prices over the next 12 months (compared to 59 per cent last quarter), while only 7 per cent expect prices to fall.
In Auckland, a net 57 per cent of respondents expect house prices to rise in the next year. Confidence in the North Island, outside Auckland, is at an all-time high of 66 per cent.