Housing confidence is at a 25-year high but buyer sentiment has turned negative as properties become increasingly unaffordable.
Photo: RNZ / Nate McKinnon
The latest quarterly ASB Housing Confidence Survey indicates a net 73 percent of respondents expect house prices to rise, compared with a net 45 percent in the previous survey last July.
"This is the strongest quarterly result we've seen, and is perhaps not surprising given the way the market has been going," ASB senior economist Mike Jones said.
"It's an astonishingly quick return to confidence given just six months ago, a net 9 percent of those surveyed felt house prices would drop."
Jones said confidence was spread across the country, but at the expense of home buyer sentiment, which had fallen to a three-year low with a net 8 percent saying it was a bad time to buy.
That compared with the previous survey when a net 12 percent felt it was a good time to buy.
"Average house prices in New Zealand are now about eight times the average income," he said.
"In Auckland, the ratio is closer to 10. Only three out of 92 major global housing markets currently have house price to income ratios north of 10."
He said houses were also selling in numbers not seen in 15 years.
"Given this background, the only surprise here is that buyer sentiment isn't even lower."
Jones said the house prices were expected to rise 15 percent this year, but the outlook next year would be shaped by the residential construction boom.
"Our view is that rising supply and eventual modest increases in mortgage rates will pull annual house price inflation back down to single-digit levels in 2022."
However, he said prices were not expected to fall.
The Reserve Bank has just reintroduced loan to value ratios, and has also asked the government for another tool - debt to income ratios.