ASB Housing Confidence survey: Sentiment inches up, but Kiwi still on the fence on housing market

13 June 2023

  • More New Zealanders think we're nearing the bottom of the housing market, with just a third (net 34 %) expecting house prices to fall further, down from net 43% last quarter
  • A growing number of Kiwi expect home loan rates are nearing their peak, but more than half (net 59%) still anticipate further interest rate rises
  • Aucklanders are the most confident, with net 6% agreeing it's a good time to buy property

In the first meaningful positive shift in house price expectations since mid-2021, ASB's Housing Confidence data shows more New Zealanders agree we're edging closer to the turning point for the housing market, with the nation now roughly split 50/50 on whether it's a good time to buy. 

ASB's latest Housing Confidence survey for the three months to April 2023 shows a net 34% of respondents expect house prices will continue to fall in the coming year, down from a net 43% in the quarter prior. But while this uptick represents a sizeable shift in perception, the majority of New Zealanders (net 66%) still aren't convinced the property market has found its floor. 

The shift in price expectations was reported throughout the country, but was more pronounced in the South Island, where house prices may have already turned. This is backed by recent REINZ data, showing prices stabilising and activity lifting nationwide, but with Canterbury outperforming.  

ASB Economist Nathaniel Keall says while recent data suggests house price falls may be slowing, and there's more optimism mortgage rates have peaked, overall confidence remains very low.

"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. 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."

The survey showed net 59% of respondents expect a further lift in interest rates. This is down from the 26-year high of a net 81% this time last year, signalling a change of mood as the RBNZ 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. 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."

Respondents were roughly evenly split on whether now is a good time to buy. A net 1% of people said it was 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. This is back in positive territory, with Aucklanders feeling 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. 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."

The full ASB Housing Confidence Survey for the three months to April 2023 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'.

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