ASB Housing Confidence survey: Kiwi expect house prices to stay down, despite falling interest rates
4 September 2024
The latest ASB Housing Confidence Survey released today shows Kiwi are not expecting an uptick in house prices any time soon and remain divided on whether now is a good time to buy, despite a change in sentiment around interest rates.
ASB’s Senior Economist Kim Mundy says she’s not surprised by the level of scepticism this quarter when it comes to housing confidence.
“We’re currently seeing a soft housing market, with plentiful supply, high debt servicing costs and upfront affordability constraints. There’s also weakening demand with rising unemployment and easing migration. These combined factors are creating uncertainty and scope for doubt, despite last month’s cut to the OCR and retail banks reducing mortgage rates. These views are in line with our forecasts that higher house prices won’t be on the table until 2025."
The level of confidence in house price gains fell significantly, with a net 13% of respondents expecting lifts compared to net 44% last quarter. All regions saw a decline in net expectations, with Aucklanders being the least optimistic and South Islanders taking a slightly more glass half full approach.
“The gloomy sentiment from most Kiwi regarding house price gains is in step with the recent data we’ve seen showing house prices falling over the past three months. We’re forecasting only a slight 1% lift over 2024 mostly due to weak demand as a result of the soft economy. We do expect brighter times ahead in 2025 with the expectation interest rates will continue to fall,” says Mundy.
For the seventh consecutive quarter, the ASB Housing Confidence Survey showed an increasing number of respondents expecting lower interest rates. A net 20% of respondents are now expecting lower interest rates – the highest share since October 2020.
Mundy says it’s somewhat surprising that despite an expectation interest rates will continue to fall, this isn’t translating to a view of increasing house prices.
“This might indicate people put more weight into other economic indicators, such as employment rates or migration figures, instead of simply what interest rates are doing. Further interest rate drops may translate into greater confidence in house prices eventually lifting, though we do expect any initial price gains to be marginal.”
The survey shows most respondents remain cautious of buying property in the current climate, reflecting the data which show house sales dropping by nearly 9% this past quarter. At a regional level, Aucklanders remained the most hopeful, with a net 16% thinking now is a good time to buy compared to only net 1% of Cantabrians.
“While New Zealanders are still not convinced now is a good time to buy, we did see a modest lift in respondents who were optimistic, up from 2% to 8% of all respondents. We do expect positive sentiment to grow in the coming months, with further declines to interest rates likely and listings in abundant supply."
The full ASB Housing Confidence Survey along with other recent ASB reports covering a range of commentary, can be accessed at our ASB Economic Insights page:
