Housing confidence rises as prices slip

Friday 27th February 2009

New Zealand housing confidence rose in the three months through January as falling house prices and cheaper borrowing costs revived the appeal of property as an investment.

A net 38% of respondents say now is a good time to buy a house, according to the ASB Housing Confidence Survey. A net 51% expect house prices will fall further in the next 12 months, while 49% see interest rates declining.

"The marked declines in interest rates are having a strong apparent influence on the shift in sentiment," chief economist Nick Tuffley said in a statement. Still, "the weak state of the economy and mounting job losses will weigh on the market, and the current air of uncertainty is weighing on decision-making."

New Zealand property values dropped 8.3% in the three months to January from a year earlier , according to QV Valuations. The central bank has embarked on its steepest easing cycle since introducing the official cash rate in 1999 as the economy has stumbled through a prolonged recession.

The ASB survey shows Aucklanders have become most upbeat, with 42% deeming now a good time to buy a house, while 53% see property prices lower by the end of the year. That compares with a rate of 38% in the rest of New Zealand who favour buying property now.

Building permits , excluding apartments, fell a seasonally adjusted 8.2% in January to the lowest level since the series began 17 years ago, according to a Statistics New Zealand report published today.

For the first time since June 1998 the value of non-residential building consents exceeded residential, by $362 million to $329 million.

By Jonathan Underhill

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