But Kiwis still on the fence about the housing market
More Kiwis believe New Zealand is edging closer to a turning point for the housing market, with just 34% now expecting house prices to drop further in the coming year, down from the prior quarter’s net 43%.
This was according to ASB’s latest Housing Confidence survey for the three months to April 2023, which also said that despite the sizeable shift in perception, a massive net 66% of New Zealanders remained unconvinced the property market has found its floor.
Price expectations shifted throughout the country, the survey found, but were more striking in the South Island, where house prices may have already turned. This is backed by recent REINZ data, which showed prices stabilising and activity rising nationwide, but with Canterbury outperforming.
Nathaniel Keall (pictured above), ASB economist, said overall confidence remained very low despite recent data indicating an easing in house price declines, and more optimism that mortgage rates have peaked.
“It seems the housing market is moving into more lukewarm territory, but we're still a long way off the red-hot days of 2020 and 2021,” Keall said. “It remains a tricky environment to predict what's next for interest rates and house prices, and this uncertainty comes as many New Zealanders are doing it tough in terms of managing their mortgage repayments and housing affordability.”
A net 59% of the survey respondents were expecting interest rates to rise further. That figure was down from the 26-year high of a net 81% this time last year, signalling a change of mood as the central bank nears the end of its OCR tightening cycle.
“This quarter’s result doesn’t capture the dramatic shift in migration figures, the 2023 budget or the RBNZ’s last monetary policy statement, which will all be key watchouts for the next quarter,” Keall said. “Still, it’s not surprising to see interest rate expectations soften a little. The RBNZ has delivered 525bps of hikes and while inflation remains high, it’s moving in the right direction.
“We don't expect any further OCR hikes from here, suggesting mortgage rates are at or around their peak. But we do agree it's sensible to be budgeting on rates remaining at these levels for some time to come, with OCR cuts unlikely before mid-2024.”
The respondents were roughly split 50/50 on whether now is a good time to buy a property, with a net 1% of people agreeing now is a good time (20% said it is a good time and 19% said it is a bad time), up from net 20% saying it was a bad time to buy this time last year. Aucklanders were the most confident at net 6%.
“Twelve months ago, respondents were largely in agreement that it was a bad time, with fear of overpaying and rising mortgage rates big concerns,” Keall said. “Given house prices have eased significantly since then, it may be more Kiwis feel there are bargains to be snaffled up, provided any further mortgage rate lifts prove manageable.
“We wouldn't be surprised to see buying sentiment lift further over the coming months, as Kiwi digest the RBNZ's ‘we think we’re done’ message.”
Visit www.asb.co.nz to access the full ASB Housing Confidence Survey for the three months to April 2023.
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