PHOTO: ASB
- Housing confidence is tentatively turning higher. All three of our key confidence measures we monitor show respondents are feeling more positive about housing relative to the situation three months ago.
- This sentiment broadly matches the nascent signs of a turning we’ve seen in other housing data.
- House price expectations crept higher, interest rate expectations fell sharply, and more people believe now is a good time to buy a house.
Summary
House price expectations rose over the three months to July. All regions experienced an increase in price optimism although Aucklanders remain down-beat overall, with a net 3% still expecting prices to fall. House-buying sentiment also continued its trend improvement of the past few years. A net 9% of respondents now say it is a good time to buy a house. This is the most positive reading since January 2013. Mild improvements in affordability have no doubt been a driver. Wage growth has picked up alongside flat/falling house prices in Auckland and Canterbury.
It appears the general public got the hint on interest rates. Respondents’ interest rate expectations flipped from the majority expecting rates to increase last quarter, to a net 10% expecting them to fall. The RBNZ will be pleased the message is now getting through, following a few communications wobbles earlier in the year. Lower interest rates were duly delivered. The RBNZ cut the Official Cash Rate (OCR) 25bps in May and 50bps in August, to 1.00%. There’s more to come; we expect another 25bps cut in November. The attendant falls in mortgage rates are a key part of our view for a pick-up in house price inflation over the next 6-9 months.
READ MORE VIA ASB