Changes in government housing policy announced in March have dampened Kiwis’ house price expectations only a little, according to the latest ASB Housing Confidence Survey. A net 64% of respondents say they expect house prices to continue climbing in the coming 12 months, down from last quarter’s record 73%, but still the third highest result in the survey’s 25-year history.
ASB senior economist Mike Jones says the Housing Confidence numbers are further evidence that housing market pressure is being released only gradually.
“It is notable that housing confidence remains at such high levels. After all, there’s been plenty of policy-related potholes for the market to dodge lately. LVR restrictions are back on, the loan repayment deferral scheme has come to an end, mortgage rates are no longer in free-fall and, in late March, some of the government’s recent tax changes came into effect. Housing confidence joins a number of other housing indicators pointing to stubborn resistance.”
“We were already of the view house price momentum was starting to peak, and we might see a bit more of a drop in confidence next quarter as the full impact of the government’s tax changes are felt. But, so far, housing views have remained steady,” says Mr Jones.
“We’re seeing this reflected in Kiwis’ perceptions of whether it’s a good time to buy, with would-be homeowners understandably frustrated. A net 21% of surveyed respondents now believe it’s a bad time to buy a house. That’s close to as gloomy as it gets for this index and completes a full reversal of the positive buyer sentiment prevailing this time last year.”
The most recent survey, which covers the three months ended April, showed Aucklanders were again the most downbeat about the property market, with prices continuing to hit new records in the region and affordability increasingly stretched.
“Buyer sentiment tends to mirror house price appreciation as houses become even less affordable. The position of the housing cycle is likely also to be a factor. The bigger the boom, the less perceived additional upside, and the bigger the hit to buyer sentiment,” says Mr Jones.
“Bearing these factors in mind, it’s not that surprising we’ve seen buyer perceptions deteriorate rapidly over the past year. After all, recent REINZ housing figures confirmed the current housing boom is now the most significant in recorded history with annual house prince inflation marked at a heady 27% in April.”
“It’s our view that the rate of house price inflation will slow from here, but it’s going to take time given how out of whack supply and demand became during the boom.”
The full ASB Housing Confidence Survey for the three months to April 2021 will be available online at www.asb.co.nz Other recent ASB reports that also include housing commentary can be accessed via a Search page https://reports.asb.co.nz by selecting the keyword ‘Housing’.