Confidence in rising house prices dwindling

After hitting a record high in the previous quarter, house price expectations slowed in the three months to October, but remain at high levels.

ASB’s quarterly survey of housing market sentiment showed a net 52% of respondents now expect houses prices to increase over the next year, down from the net 65% who expected price gains in the three months to July - the highest reading since the survey began in 1996.

Across the regions, confidence in rising prices fell across the board, but remain at high levels. The most pronounced falls were in Auckland (down to 50% from 71%) and Canterbury (down to 40% from 58%).

ASB chief eEconomist Nick Tuffley said weaker expectations in Auckland were likely to reflect the new investor restrictions being introduced by the Government and RBNZ. The ongoing moderation in Canterbury is consistent with the market moving back into a more balanced position.

“The decline in price expectations in the rest of New Zealand, however, is more surprising,” Mr Tuffley said.