The survey covering the three months ended July shows only a net 2% now expect house prices to continue to rise over the next 12 months, down from a net 12% three months earlier and down from an average net 50% through 2003.
"People are being realistic in not expecting to see a repeat of the large price increases of the last two years," says ASB chief economist Anthony Byett.
The latest figures showed the national median house price has risen from $184,000 in June 2002 to $243,000 in June 2004, a 32% increase.
The survey also shows most people have got Bollard’s message that interest rates are rising: a net 68% expect interest rates to rise further. That’s up from 58% three months ago.
Bollard has already raised his official cash rate (OCR) four times this year from 5% to 6% with the rampant housing market among his key concerns.
He might be less pleased to note that housing confidence has improved slightly, although it still remains in negative territory. A net 7% of people believe it isn’t a good time to buy a house, down from a net 18% three months earlier. Housing confidence has been negative since August last year.
"The small improvement in perception about timing is a sign that people are under less pressure to buy quickly now – the market is more balanced," Byett says.
"For first home buyers, this is creating opportunities to enter the market in a more considered fashion. For existing home owners, it is a double-edged sword: think carefully before entering into unconditional purchase agreements," Byett says.
He points to the increasing number of days it is taking to sell a house on average from 24 days late in 2003 to 31 days in June this year as an indication that there is less pressure on buyers.
"Invariably, though, there will be some disappointment amongst sellers, in particular amongst those who become forced sellers. It is a time for realistic expectations and good planning," Byett says.
But with economic growth still strong and unemployment so low, most people will have the wherewithal to weather rising interest costs, he says. Another positive is that immigration remains positive, providing extra demand for housing. "The market may have come off the boil, so to speak, but it has not gone cold."
Given the high profile of booming housing markets in places such as Wanaka, Queenstown and Nelson, it isn’t surprising that South Islanders are more pessimistic than the rest of
