Confidence in the housing market on the rise

Tuesday, 26 November 2024

Confidence in the housing market is slowing bouncing back.

Confidence and optimism in the housing market is slowly on the rise, according to the ASB Housing Confidence Survey.

In the quarter ending in October, Kiwis’ expectations for house prices were positive for the fifth consecutive quarter.

Aucklanders were the most optimistic as 29% of respondents were expecting house price increases, up from 13 % last quarter.

Optimism in the property market is slowing increasing with momentum expected to build in the coming months.

ASB’s latest Housing Confidence Survey found in the quarter ending in October, Kiwis’ expectations for house prices were positive for the fifth consecutive quarter.

The Reserve Bank has cut the Official Cash Rate by 50 basis points, dropping it to 4.75%. The move has triggered immediate interest rate reductions across major banks, giving homeowners a break ahead of the holiday season. Zane Small reports.

Confidence in house price gains had improved, although it remained lower than the levels observed at the start of the year.

Optimism was particularly strong in Auckland where 29% of respondents were expecting house price increases, up from 13 % last quarter.

Buyer sentiment in the region was also bullish with 24% of those surveyed believing it is a good time to buy – the highest in the country.

South Islanders were also feeling confident, with 29% of respondents also anticipating house price growth and positive buying sentiment jumping to 16%, up from 2% last quarter.

Meanwhile, about 57% people anticipated a decrease in interest rates, up from 20% in last quarter’s survey. This marked the highest rate of respondents expecting lower interest rates since the ASB’s Housing Confidence Survey began 28 years ago.

Aucklanders remained the most optimistic, with a net 60% of respondents expecting rates to fall.

And about 20% of respondents thought it was a good time to buy in the three months to October, a significant increase compared to the 8% recorded last quarter.

ASB senior economist Kim Mundy said while the data was encouraging and was not surprising given the substantial decline seen in mortgage rates since mid-July, expectation for house price gains were growing at a relatively slow pace.

“While the housing market is certainly poised to pick up, and REINZ data shows sales activity is already on the rise, it may take some time before this translates into a pronounced upswing in house prices,” she said.

The data showed overall confidence levels remained lower than what it was at the start of the year, with close to 72% expecting house prices to remain flat or rise, compared to 90% in Q1 2024.

This suggested New Zealanders may be concerned about other economic impacts that may hinder house price gains such as rising unemployment and slowing net migration, Mundy said.

“With another 50bps cut to the Official Cash Rate (OCR) forecast this week and further cuts anticipated in 2025, we expect New Zealanders’ expectations around each of the metrics we track against to evolve in line with our view that we’ll start to see higher house prices in 2025.”