Expectations rose for the second quarter in a row according to the latest ASB Housing Confidence Survey. Despite the recovery in net price expectations, respondents’ views remain subdued relative to recent averages. The still-subdued house price expectations suggest that ongoing uncertainty in the housing market is fuelling caution about market prospects. For example, while election-related uncertainty has subsided (when net house price expectations slipped as low as +16%), the outlook for the housing market is murky. Competing influences of strong population growth, limited supply, legislation uncertainty, and affordability constraints have subdued market activity and prices. Looking forward, we expect house price expectations to remain relatively subdued as market participants await more clarity around proposed legislation changes.House price ex
Interest rate expectations barely moved in the three months to July. This is unsurprising when mortgage rate moves have been marginal. The Official Cash Rate (OCR) has now been on hold for just under 2 years and is expected to remain at 1.75% for at least another 12 months. The steady OCR has been anchoring shorter-term fixed mortgage rates, as well as the variable rates. Any marginal moves in bank mortgage rates have largely been the result of inter-bank competition.
On balance, respondents continue to think it’s a bad time to buy a house. However, respondents were the most optimistic they’ve been in over 2 years. Recent patterns remain intact with sentiment most negative in the North Island. Christchurch remains the only region where the majority of respondents think it’s a good time to buy.
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