ASB survey: Steep house prices turning people off

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The ASB bank’s latest housing confidence survey for the three months to October shows a net 12 percent of people thought it was a good time to buy a house, a 9 point drop on the previous quarter.

It found that nearly half of respondents thought house prices would rise over the next 12 months, a 54 point increase on the July quarter.

ASB senior economist, Mike Jones, said steep house prices were turning off some buyers.

“There’s too much demand for quite a restricted supply and there are number of factors out there, be it lower mortgage rates or certain other policy stimulus that are boosting demand at the moment.”

However, he said there were signs that sentiment would improve.

“I think the reimposition of LVRs (loan-to-value restrictions) is potentially one, but you’re also seeing both the government and the Reserve Bank under pressure to tackle the housing issue and I think we will see some more measures next year designed to bring a bit more stability to the housing market.”

Jones said any measures would have to balanced against the need to keep interest rates low.

The survey found that Cantabrians were the most bullish, with a net 29 percent saying it was a good time to purchase a property. While people living in North Island (excluding Auckland) were the most pessimistic.

The public’s view of interests held at the same levels seen in July, with nearly a third of respondents expecting interest rates to continue to fall.

Source: RNZ News – www.rnz.co.nz

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