Photo: RNZ
New Zealanders are feeling noticeably more positive about the housing market, and ASB's economists say that is likely to turn into more activity, and rising prices.
The bank's latest housing confidence survey shows an increase across all of its measures - house price expectations lifted, there was positivity about interest rates continuing to drop and improving sentiment about whether it's a good time to buy.
A net 20 percent of respondents thought it was a good time to buy, up from 8 percent last quarter.
Aucklanders had some of the strongest expectations of house price increases, where a net 29 percent think prices will rise, up from 13 percent last quarter. A reading of zero would indicate respondents were evenly split.
ASB senior economist Kim Mundy said the turnaround in sentiment was not surprising given the "substantial" decline in mortgage rates since mid-July.
She said expectations that prices would rise were growing at a slower pace.
"While the housing market is certainly poised to pick up, and Real Estate Institute data shows sales activity is already on the rise, it may take some time before this translates into a pronounced upswing in house prices… while this might point to a pickup in market momentum, it might not point to a pickup in price gains as quickly.
She said falling interest rates were one of the main factors pushing activity higher but that could be offset by other economic factors, such as a rising unemployment rate and uncertainty. "If you have any concerns about the safety of your job or being made redundant you're not going to be in the market to buy a house irrespective of what interest rates are doing.
"Our survey data shows overall confidence levels remain lower than what we observed at the start of the year - close to 72 percent of those surveyed expect house prices to remain flat or rise, compared to 90 percent in the first quarter of 2024 which suggests New Zealanders may be concerned about other economic impacts that may hinder house price gains such as rising unemployment and slowing net migration."
ASB had previously expected prices to rise by 10 percent next year but Mundy said that was under review.
There was a lot of stock on the market, which could have a dampening effect on prices, she said. "Inventory is at 10-year highs, there are plenty of houses to choose from so buyers are not having to pay up or fight to get the one they want."
She said overall the coming months were likely to have a trend of growing housing market optimism. "We expect that to turn into higher house prices."