Housing confidence has eased from a record high, but remains strong in the face of worsening affordability and the prospect of higher interest rates.
ASB senior economist Mike Jones said the dip represented a "bit of a wobble", but confidence was still the third highest in the survey's 25-year history (file image). Photo: RNZ / Nate McKinnon
The latest quarterly ASB Housing Confidence Survey to the end of April showed a net 64 percent of respondents expect house prices to rise, compared with a record 73 percent in the previous survey.
ASB senior economist Mike Jones said the dip represented a "bit of a wobble", but confidence was still the third highest in the survey's 25-year history.
"Housing confidence joins a number of other housing indicators pointing to stubborn resistance," Jones said.
But the headwinds were gathering for the sector, including the recent tax changes, loan to value ratios, increasing numbers of houses being built, and now the prospect of rising interest rates, he said.
"We were already of the view house price momentum was starting to peak, and we might see a bit more of a drop in confidence next quarter as the full impact of the government's tax changes are felt."
The number thinking it was a good time to buy turned more pessimistic, with a net 21 percent saying it was not a good time buy up from 8 percent in the previous survey.
Jones said that reflected house prices growing 27 percent in the past year, according to industry data, and the worsening housing affordability gap.
"Buyer sentiment tends to mirror house price appreciation as houses become even less affordable. The position of the housing cycle is likely also to be a factor. The bigger the boom, the less perceived additional upside, and the bigger the hit to buyer sentiment."
Housing inflation was expected to slow gradually from here on, but it would take time for the current supply and demand imbalance to be fixed, Jones said
A further sign of changing attitudes was the turnaround in sentiment about interest rates, with a net 20 percent expecting rate rises compared with a negative 13 percent reading last survey.
