Buyer confidence at 7-year low
Confidence in the housing market is at its lowest point since 2007, says ASB.
A net 11 per cent of respondents to the bank's latest housing confidence survey believed it was a bad time to buy a home.
"Recent interest-rate rises, the steady increase in house prices and lending restrictions have all combined to create a growing mood of pessimism among prospective buyers," ASB chief economist Nick Tuffley said.
Sentiment had most notably declined in Auckland, with a net 21 per cent of respondents saying that now was a bad time to buy, compared with a net 10 per cent in April, Tuffley said. "Auckland continues to record stronger house-price gains than anywhere else in the country, while a lack of housing supply is likely causing frustration for buyers in both Auckland and Canterbury."
A net 49 per cent of survey respondents in the three months to July expected house prices to rise in the next 12 months
ASB said housing supply was still having an impact on both house-price expectations and housing-market sentiment.
"There are a low number of houses for sale nationwide," Tuffley said.
"Supply will lift gradually as construction picks up, but this process will take time.
"Throw into the mix the good performance of the economy and we see no immediate driver for house prices to fall, or interest rates to come down, in the near future."
A majority of survey respondents (a net 69 per cent) believed interest rates would continue to rise.
ASB agrees, but it is expecting the Reserve Bank to hold off raising the Official Cash Rate (OCR) again until early 2015.
"We anticipate the Reserve Bank will lift the OCR to 4.5 per cent over 2015, a further 1 per cent above current levels, which would result in a further mortgage-rate increase for borrowers," Tuffley said.
Meanwhile, Westpac said the July round of housing data sug gested the market was recovering after the slowdown early this year.
House prices were on track to rise about 5 per cent this year, compared with 10 per cent last year, the bank predicted in its August analysis.
Westpac chief economist Dominick Stephens said net migration, set to reach an all-time high of 50,000 people a year, was one driver of higher house prices.
While Westpac's research indicated net migration usually played a relatively small role in determining house prices, "sheer weight of numbers" meant it would translate into "a reasonable boost" over the year ahead.