The bank’s survey reveals the proportion of respondents who think it’s a good time to buy a house hit the highest level since April 2016 over the quarter to October 2018.
Although 51% of respondents says it is neither a good or bad time to buy, 16% now say it is a good time to buy as compared to 14% last quarter.
The proportion of respondents who feel it is a bad time to buy remains unchanged from last quarter at 19%.
ASB chief economist Nick Tuffley says survey respondents came within a whisker of the majority thinking it’s a good time to buy.
This is significant as pessimists have outweighed optimists in this survey for over five years, he says.
“The combination of slowing house price growth across much of the country, more homes to choose from and a favourable interest rate outlook are likely underpinning the increase in the number of respondents who think it’s a good time to buy a house.”
Tuffley expects respondents’ perceptions around whether it’s a good time to buy will remain contained by the fact that prices remain stretched relative to fundamentals in many centres.
However, the survey results suggest that the current state of the market is also impacting on house price expectations.
A net 26% of respondents expected house prices to increase – which is the lowest level since January. It is a marked drop from the 38% who expected prices to increase last quarter.
The trend was obvious across all regions of the country.
But respondents’ were least optimistic in Auckland (a net 15%) and Canterbury (a net 19%), reflecting a prolonged period of flat and/or falling house price growth in these two regions.
Tuffley says the widespread fall in house price expectations reflects the slowing in sales activity and house price growth that has been witnessed recently.
Recent legislation changes, such as the foreign buyers ban, may have weighed down respondents’ house price expectations.
“It follows that respondents are possibly factoring in a reduction in demand when they think about their house price expectations.”
This reinforces the ASB economists’ view that house price growth across much of New Zealand has peaked.
Meanwhile, the survey also shows that fewer respondents now expect higher interest rates in the year ahead.
A net 26% of respondents think interest rates will increase as compared to a net 33% of respondents in the last quarter.
Tuffley says bank mortgage interest rates have fallen across most fixed terms in recent months while questions remain around when the Reserve Bank (RBNZ) will raise the OCR.
“Both these developments are likely to be shaping respondents’ interest rate expectations. It’s not surprising to see respondents expecting that interest rates are likely to stay low, or shift even lower again, over the coming 12 months.”
