Home buyers showing new confidence

More people think it's a good time to buy. Picture / Martin Sykes

The housing market is fairly balanced with no advantage to either sellers or buyers, says ASB Bank chief economist Anthony Byett.

That was in contrast to the past several quarters when it was very much a seller's market.

ASB's quarterly survey of housing market sentiment found more people believe it is a good time to buy than a bad time. Not many more people - a net 5 per cent - but that is still up from an average net 3 per cent believing it was a bad time to buy three months ago and on average during the 2003 to 2005 period.

"It's almost a collective sigh of relief that the market is not as bad as people feared."

Byett said the market might be slower than in recent years but it was still not slow.

However, it was likely to slow further yet as incomes struggled to keep growing at their recent pace.

The lift in sentiment comes despite the fact that house prices are rising and people expect them to keep rising. They expect higher interest rates too.

Byett said turnover in the housing market was well down on the levels seen at the peak in 2003, but it was still above its long-run average and had picked up from the first two months of this year.

Prices also indicated a small market revival. Median prices were above previous highs in several regions, including Auckland, during the June quarter.

In the ASB survey, slightly more people expect prices to rise than fall - a net 7 per cent - but that compared with a net balance of 60 per cent expecting higher prices back in 2003.

Byett said more than 40 per cent of fixed home loans were due to roll out of their fixed rate period over the next 12 months and those borrowers faced interest rates around 0.5 percentage points higher on average.

Debt servicing costs - the proportion of the average disposable income needed to service a 100 per cent loan for the median-priced dwelling - was well above the levels of the 1990s, though it had new stabilised.

Statistics New Zealand's quarterly employment survey, released yesterday, recorded a 7.7 per cent increase in total gross earnings over the year to June, reflecting more jobs, higher wages and more hours worked.

But with the economy now in a slow patch, and at least a year away from picking up again, that sort of income growth could not be expected to continue, Byett said.

And higher costs, such as for petrol and rates, were eroding those gains.