Confidence in the housing market has continued to fall, as home buyers take their time before making any major financial commitment.
In the latest ASB Bank survey of housing intentions, for the three months to April, a net 32 per cent of those questioned thought it was a good time to buy. That's down from a net 38 per cent in the previous quarter and 55 per cent in the three months to last October.
Fuelling the current uncertainty are changes in government policy, media reports of sharply falling real estate turnover and growing concerns about the outlook for house prices.
ASB Bank economist Rozanna Wozniak said prospective buyers were aware that the balance of bargaining power was in their favour at the moment, as prices had edged lower in recent years and turnover was weak.
"But many prospective sellers are refusing to sell because of the prospect of realising a loss," she said. "This stalemate has resulted in a fall in real estate turnover. According to the REINZ, turnover nationwide during the three months to April was down 17.5 per cent on the levels of a year earlier."
While the lower North Island was the least optimistic, that was in sharp contrast to their actual buying behaviour. Wozniak said that real estate turnover in this region, particularly in Wellington, had withstood the downturn better than most other parts of the country.
"With further interest rate rises on the horizon and the impetus of a growing economy starting to reduce, a quiet winter lies ahead for the housing sector," Wozniak said.
"Further modest falls in house prices are likely during the next few quarters. However, I wonder how much of this weakness has been justified and to what extent reports of plunging real estate turnover have actually fuelled the downturn.
"In other words, did the reports to some extent eventually become self-fulfilling? That is not to say that house prices would otherwise be rising - merely that the weakness has been exaggerated."
