KEY POINTS:
More people believe house prices will keep on rising, but in a sign that higher interest rates might be starting to bite, fewer believe now is a good time to buy a house, according to a survey published today.
The ASB Housing Confidence Survey found a net 55 per cent of respondents expected house prices to keep rising, up from 44 per cent three months ago.
"This result, which follows the marked jump in the preceding survey, is in line with many of the housing statistics that show the market gaining further steam this year," ASB said. "The housing market has been clearly gaining momentum since late 2006, and the price expectations of the latest survey suggest this momentum will be sustained."
The result comes despite two rises in the official cash rate by Reserve Bank Governor Alan Bollard this year to 7.75 per cent and a climb in two-year fixed-rate mortgages from 8.17-8.5 per cent to 8.42-8.9 per cent.
While higher interest rates have done little to dampen expectations of the housing market, fewer believe now is a good time to buy a house.
A net 3 per cent of respondents said it was a bad time to buy a house.
In January, a net 7 per cent felt it was a good time to buy.
"There are signs of increasing awareness that economic fundamentals may catch up with the market before too much longer," ASB said.
"The recent jumps in mortgage rates ... should also impact on home buying decisions." ASB said the recent rises in the OCR "may have been substantial enough to have some bite".
But it said despite higher debt servicing costs, the point at which those costs become a definite constraint on decisions to borrow further does not seem to have been reached.
"I expect the housing market to continue to be robust in the short term, but ... affordability is increasingly stretched," said ASB's chief economist, Nick Tuffley.
"Inevitably house prices will flatten for a period, allowing the fundamentals to at least partly correct the overextension of house prices and debt servicing relative to incomes."
