Paradise lost: Kiwis lose confidence in housing

The end of the dream? Kiwi confidence in the housing market is at an all time low. Photo / Doug Sherring

Confidence among house buyers is hitting new lows as expectations of rising prices and debt costs drive people away from the dream of owning a home, according to the ASB's latest housing confidence survey.

The survey for the three months ending October showed 35 per cent of respondents think it's a bad time to buy a house (down from 33 per cent last quarter) and only 10 per cent say it's a good time - making this quarter an all-time low in buyer confidence.

"Since 1996, there has never been a greater proportion of people who think it is a bad time to buy a house than now," ASB said. "While sentiment remains lowest in Auckland, other regions registered the sharpest falls this quarter."

The South Island (excluding Canterbury) saw the largest drop in sentiment with a net -22 per cent thinking it's a good time to buy, while Auckland was steady at a depressing -33 per cent.

A negative result represents more people thinking it's a bad time to buy than good.

Canterbury returned a net -17 per cent and the rest of the North Island was at -24 per cent.

According to QV data released this week the average Auckland house was valued at $1,045,207.

The ASB survey showed that, overwhelmingly, Kiwis expected house prices to rise with nationally a net 58 per cent expecting increased costs, the South Island leading the way at a net 66 per cent and Auckland at a net 51 per cent.

The ongoing expectation of rising prices along with the latest loan-to-value ratio (LVR) restrictions have subdued buyers confidence, said ASB chief economist Nick Tuffley.

"The fact that the 40 per cent investor deposit requirement is having a proportionately larger impact on investors outside of Auckland could explain why sentiment dropped more in other regions this quarter," Tuffley says.

The number of people expecting higher interest rates edged up to 25 per cent from 24 per cent in the previous quarter, with 18 per cent picking them to fall and 32 per cent to remain the same.

After a slump in September house sales Realestate.co.nz spokesperson Vanessa Taylor dubbed 2016 "the year of unpredictability".

"Traditional seasonal behaviour is diminishing as sellers appear to be more focused on selling at a premium particularly in markets like Auckland, while buyers are considering all their options and properties are now taking a longer time to turn over," Taylor said at the time.

In July, ANZ chief executive David Hisco said Auckland house prices and the New Zealand dollar were over-cooked and warned of a looming correction.

"The Baby Boomers who have become property investors in recent years based on shallow deposits will soon realise what I'm already seeing - more and more rental properties where owners either can't find a tenant, or the rent can't cover the mortgage. Salaries and wages have hardly changed whilst house prices have risen - this can't continue so it's a matter of when, not if, the market adjusts," Hisco wrote in the Herald.

"Eventually, landlords will realise that getting a measly yield is not worth it, nor is leaving a property empty, and they will try to sell and take any possible capital gain. Nobody knows where the top of the market is but, as they say, nobody ever went broke taking a profit."