Optimism in the housing market is waning and the direction for house prices is downward, according to ASB's latest Housing Confidence Survey.
ASB is predicting a 3% to 4% drop in house prices this year, due to a lack of buyer appetite.
The survey showed declining optimism from respondents over whether now is a good time to buy, and whether house prices and interest rates will increase over the next 12 months.
Respondents expecting house prices to move higher over the next 12 months dropped to 35% from 51% the previous quarter.
A net 59% of those surveyed expect interest rates to rise over the next 12 months, on par with 60% from the previous quarter.
Those surveyed are also less optimistic on now being a good time to buy, with a net 29% of those considering now still a good time, compared to 33% recorded in the three months to January.
Activity has fallen sharply over the past few months, largely driven by continued uncertainty over the potential for tax advantages for property investment and ASB predicts that any tax changes announced in the May 20 Budget are likely to continue influencing the housing market "for some time".
"Even [after the Budget], any changes will likely mean reduced demand for investment property and thus lower housing market activity."
The lower level of activity in the market is also reflected in subdued mortgage approvals, now around 15% lower than last quarter and the awareness from respondents that interest rates will increase over the coming year, ASB says.
However, the positive influences on house prices include continued population growth at a time when building construction is down, plus the fact prices remain resilient for now. Real Estate Institute of New Zealand figures show house prices are 6.8% up on this time last year.
"Beyond the ups and downs of 2010, we expect weak house price growth, although continued population growth will provide some support," ASB said.
Source: Landlords.co.nzcomments powered by Disqus