Glimmer of hope for housing

A further indicator has emerged suggesting some signs of hope for the troubled housing market.

BNZ's latest confidence survey, carried out among the 16,000 readers of its Weekly Overview, shows a general deterioration in sentiment compared to the last survey back in December.

But for residential real estate, the survey published today shows sentiment has improved significantly from the monthly surveys carried out late last year.

BNZ attributed that improvement to lower interest rates along with increasing perceptions of a shortage.

"At the same time as vendors have become more realistic in the prices they will accept, more buyers have been entering the market," BNZ said.

"They appear to be a mixture of both owner-occupiers getting on with life and investors attracted by yield compared with the alternatives."

With the unemployment rate set to soar, that did not encourage BNZ to "write in terms of rising prices".

"But it appears increasingly that the market is `clearing' more easily and it is becoming appropriate to speak in terms of turnover having passed its weakest point.

"What will be interesting is the impact later this year and through 2010 of an expected surge in net immigration and worsening housing shortage due to the construction collapse."

The BNZ survey results come a few days after QV Valuations reported increased interest in houses in sought-after areas and a return of investors to the market.

Despite those hopeful signs, QV said national property values fell 8.9 percent in the year to February, down further from the 8.3 percent decline reported in January.

Other signs the real estate industry was feeling more hopeful included comments from Harcourts New Zealand that a notable increase in traffic on the company's website was a good sign the real estate market was set to improve.

Barfoot & Thompson also reported selling 559 homes in the Auckland market in February, up 8.9 percent on sales in January, and the first time in four years that February sales had been higher than the preceding January.

The firm said buyers and sellers were cautiously re-entering the market, and there was cause to have some optimism the housing market was settling.

So far, the tentative optimism in the housing market largely separates it from the outlook in other industries, today's BNZ survey suggests.

A net 23 percent of respondents to the survey expected the economy to worsen in the coming year, from 6 percent three months ago. BNZ did point out that the latest level of pessimism had been exceeded often in the past four years.

"Businesses generally are facing cash flow constraints and are trimming expenses in expectation of tough conditions continuing," BNZ said.

"Retailing remains weak, tourism operators are fearful, residential construction is poor, but some farmers are feeling happier."

NZPA