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Housing confidence edges lower

Friday 19th August 2011

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Confidence in the housing market edged lower in the three months to July, despite more people expecting house prices will increase.

ASB's housing confidence survey for the three months found 15 percent saying it was a bad time to buy, up from 13 percent in the previous three months. Numbers saying it was a good time to buy were unchanged at 40 percent, leaving a net 25 percent of optimists, down from 27 percent previously.

More people now expect house prices to rise, with Aucklanders continuing to have the highest price expectations, while price expectations rebounded in Christchurch in July after the June earthquake.

The 44 percent of those surveyed expecting house prices to rise was up from 35 percent in the previous three months, while the 19 percent expecting lower prices was down from 25 percent.

The easing in housing confidence, despite the rise in expectations that prices will go up, had likely reflected expectations at the time of the survey that the Reserve Bank would be increasing interest rates earlier than previously thought, the report said.

A net 46 percent of those surveyed had expected rates to rise in the next year.

But since the survey, growing concerns about the global outlook had resulted in the markets paring back much of the expectation that rates were about to rise.

The recovery in housing confidence in Christchurch during July suggested underlying demand for undamaged houses in the city, the report said.

During the next year homeowners whose properties were written off or bought by the Government would contribute to higher sales activity.

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