ASB Bank’s latest survey shows only a net 2% of New Zealanders now think it’s a good time to buy a house. That’s made up of 35% who think this is a good time to buy almost cancelled out by the 33% who think it’s a bad time.
Nevertheless, ASB chief economist Anthony Byett doesn’t think this is signalling the end of the boom.
"People are acknowledging that house prices are now more expensive, but that alone will not stop the current housing boom," Byett says.
The average nation-wide house price rose about 25% between June 2001 and June 2003 but Kiwis have continued to buy and they still expect prices to increase.
The survey found a net 42% still expect house prices to rise further, although that’s down from 54% in the June quarter.
"A housing downturn may be on the horizon but it is unlikely to arrive any time soon. Housing turnover in recent months has been strong for the time of year and there is little sign of any slowdown," Byett says.
While the housing cycle has reached a riskier stage, population growth remains strong and housing is still more affordable than it was in the mid-1990s. While the average house price has risen 26% since late 1997, the average household income is up more than 20% and interest rates are down 30%.
The survey found only 5% expect interest rates will rise, the same as in the June quarter.
"There is still a shortage of supply of houses and keenness amongst investors to buy houses and any response to interest rates by the Reserve Bank is likely to be slow," Byett says.
