House price expectations slipped again, according to the latest ASB Housing Confidence Survey – though the decline was less dramatic than in the October quarter.
With a net 23% of respondents anticipating price increases, expectations are still higher than at this time last year, when the figure hit 16%. Expectations are lowest in Auckland, where just a net 8% expect house prices to rise
Interest rate expectations continued their descent, declining in every region of the country. This is the second quarter in which interest rate expectations have fallen, beginning in August when fixed-term mortgage rates started to fall. With core inflation seemingly on the low side, we expect that RBNZ will hold off on any OCR hikes for a considerable period. Given these factors, it is unsurprising that fewer Kiwis are anticipating higher mortgage rates. By a margin of 1%, more respondents say it’s a good time to buy than a bad time – though Canterbury remained the only region with a net positive result, pushing up the total for the rest of the country. Nevertheless, other parts of the country have also grown less pessimistic, with net sentiment in Auckland at a six-year high.
This is the first time in five-and-a-half years that optimists have outnumbered pessimists in our survey, but the change is not unexpected given optimism has been slowly rising for the past eight quarters. The trend has likely been driven by a combination of slower house price growth across much of the country and favourable interest rate movements, as well as the perception that recent regulatory and tax changes are likely to dampen competition from property investors
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