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NZ housing confidence rises, house prices increase ASB survey shows

Tuesday 14th August 2012

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Housing confidence remained stable across all regions expect Auckland for the three months to July as prices rose from already elevated levels, according to an ASB survey.

A net 22 percent of respondents in the ASB Housing Confidence Survey said now is a good time to buy a house, compared with 21 percent in the previous quarter. Auckland bucked the trend with confidence dropping to 12 percent from 18 percent three months earlier.

A net 51 percent of respondents expect prices to increase, up from 45 percent previously.

"Housing market data continues to show that the dominant feature of the market is a low level of supply, with inventory approaching record lows in Auckland but also declining throughout the rest of the country," chief economist Nick Tuffley said in the report. "Prices are rising at a steady but moderate pace, and that is likely to continue."

The drop in Auckland confidence may reflect the shortage of properties and the way a housing boom tends to make people think the market is less appealing for buyers, Tuffley said. "There is a blur between people looking at the question as intending to buy or reflecting people's perceived difficulty to buy - Auckland is a sellers' market."

Price expectations remained the highest in Christchurch, where a net 77 percent of respondents expect prices to rise. That will continue "to be pushed up due to the current shortage of habitable property," Tuffley said.

Interest rate expectations showed the largest change for the quarter with those seeing rates rise in the next 12 months falling 22 points to 21 percent.

"That is not surprising given that, during May and June, speculation built that the Reserve Bank of New Zealand would cut the Official Cash Rate, largely as a response to events in Europe," Tuffley said. "That chance was reflected in wholesale interest rates and cuts to some fixed‐term mortgage rates."

"During July, though, international risks subsided somewhat, so the chance of an OCR cut diminished - the monthly survey results show this story well, with a spike in the proportion of respondents expecting lower interest rates in May, with that proportion steadily declining over June and July," he said.

Figures last week showed property values and homes sales jumped in July. Home sales rose 20 percent last month, according to Real Estate Institute figures, while property values rose 2.2 percent in the three months ended July 31, according to government valuer QV.

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