New Zealand housing confidence eases in fourth quarter
Confidence in New Zealand's housing market eased further in the three months to January, with fewer seeing it as the right time to buy in the face of high prices, bank lending limits, and likely higher interest rates, an ASB Bank survey found.
Confidence in New Zealand's housing market eased further in the three months to January, with fewer seeing it as the right time to buy in the face of high prices, bank lending limits, and likely higher interest rates, an ASB Bank survey found.
The ASB housing confidence index showed a net nine per cent of respondents thought it was a bad time to buy a house, against a net five per cent in the October survey. A year ago, a net 13 per cent said it was a good time to buy.
Limits on how much banks can lend on low deposit-high value home loans (LVR), which were imposed by the Reserve Bank of New Zealand last October to slow the growth in house prices, were seen weighing on sentiment.
The central bank is also expected to start tightening interest rates next month, after being on hold for close to three years, which will likely feed through into retail lending rates.
"The combination of high house prices and expectations of higher interest rates ... has seen a further deterioration in confidence," ASB economist Chris Tennent-Brown said.
A net 47 per cent of respondents expect house prices to increase in the next 12 months down from 56 per cent in the previous quarter, while the number expecting higher rates edged up to 55 per cent from 52 per cent.
Tennent-Brown said the housing market remains firm, with a lack of supply and strong demand in the two main cities, Auckland and Christchurch, likely to support price growth.
"Price gains are still expected this year, but the rate of house price appreciation is likely to be lower in 2014," he said.
January government agency data showed house price growth levelling out, while the Real Estate Institute of NZ's house price index fell 2.2 per cent.
