PHOTO: The ASB Housing Confidence Survey. FILE
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The number of people expecting house prices will decrease is close to the levels last seen during the global financial crisis.
The ASB Housing Confidence Survey for the three months to January showed a net 43 percent of respondents expected house prices to decrease in the coming year, compared to net 31 percent last quarter.
That compared to a net 55 percent of respondents expecting house price decreases at the height of the global financial crisis in 2008.
The quarterly survey spoke to 2962 people.
ASB senior economist Kim Mundy said compared to the 2008 crisis however, rapidly-rising interest rates were causing the housing market to fall.
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“Sometimes when you’re looking at a housing cycle, say at the start of a recession, house prices can fall because people are losing their jobs and therefore they can’t service their mortgage and they’re having to sell their houses.
“This time around, just owning a house is getting so much more expensive, because interest rates are rising so rapidly.”
Mundy said sentiment was likely to fall further.
“Housing market activity is heavily linked to the interest rate outlook so it’s not surprising people’s price expectations keep falling given the Reserve Bank has signalled there are more official cash rate hikes to come.
“House price falls have already been higher on a percentage basis than what we saw during the GFC so we might see net price expectations drop down to a GFC low, if not surpass that, in the coming quarters.”
More than three quarters of respondents (net 78 percent) expected interest rates would continue to climb this year.
“The result is unsurprising, given the RBNZ made it crystal clear in it had more work to do at the November Monetary Policy Statement,” Mundy said.
“We do expect the OCR will move higher in H1 2023 to a peak of 5.25 percent from the current 4.75 percent.”
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