Falling optimism in NZ property market – survey

Falling optimism in NZ property market – survey

Slowing house prices, lending restrictions and lack of supply are adding to falling optimism in the property market, according to a new survey.

Sold sign outside a new house being built in East Auckland

Photo: RNZ / Claire Eastham-Farrelly

ASB Bank’s quarterly housing confidence survey has fallen to its lowest level in more than five years, with 32 percent thinking prices will rise in the next year, compared with 42 percent in the previous survey.

The fall in sentiment was worst in Auckland, but was mirrored across the country.

Thirteen percent said it was not a good time to buy a house, compared with 17 percent at the start of the year.

Recent statistics from the Real Estate Institute showed a significant fall in house sales nationally, which have dropped by 24.5 percent, with a 30.6 percent drop in Auckland.

QV data, also released this month, showed Auckland house prices had the slowest rate of annual growth since May 2012.

ASB chief economist Nick Tuffley expected the sentiments shown in the latest survey to get worse before they got better.

“The subdued sales activity has coincided with the market hitting the brakes on house price growth, with prices falling slightly in Auckland and Christchurch. In the case of Auckland, this is the first time house prices have fallen since 2010.

“It makes sense that when people are hearing the market is softening they adjust their expectation accordingly,” he said.

Mr Tuffley said the slowdown was partly because of the Reserve Bank’s clampdown on risky home loans.

“We certainly think the second round of LVRs (loan-to-value ratios) has kicked things up a gear. The 40 percent investor threshold is making it much harder for some people to buy.” he said

Mr Tuffley said market conditions were expected to remain soft, so price expectations were likely to fall further.

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Published at Thu, 24 Aug 2017 22:54:55 +0000