ANZ economists warn against new housing optimism

ANZ economists are 'amused' by the suggestion that now could be a good time to buy houses. Photo / Chris Rudsdale

ANZ economists are making cautionary noises about the housing market, after some indications emerged on Friday that general sentiment could be improving.

The ASB housing confidence survey for the three months ending January found 53 per cent of respondents think now is a good time to buy a house, up from 45 per cent the previous quarter.

Today the ANZ economists said they were "amused" by the suggestion that now could be a good time to buy houses.

They acknowledged the reasoning looked secure when considered alongside low mortgage rates, poor investment alternatives such as falling term deposit rates, and potentially recovering migration.

But the ANZ economists also pointed to other factors such as rising unemployment, the extended nature of New Zealand house prices relative to income, global de-leveraging now under way, and attention now being paid to fundamentals.

"The reality is that if this is indeed the trough to house prices, it would be the shortest cycle on record," the ANZ economists said.

"If NZ manages to `house' or borrow its way out of this financial jam, then the current account deficit will be going up during the biggest credit crisis in our lifetime.

"To us, this doesn't stack up and rating agencies would hardly view such a dynamic in a positive light, anyway," they said.

"So while we may well see some fits and starts, intertwined with bouts of euphoria when it comes to housing (as is normally the case with NZers), we'd encourage people to look at the big picture."

- NZPA