New Zealand housing confidence firmer in Q3: ASB poll

WELLINGTON: Confidence in New Zealand's housing market improved in the third quarter on the back of low interest rates and growing expectations of rising house prices, an ASB Bank survey showed on Monday.

The ASB Housing Confidence Index showed a net 23 percent of respondents said it was a good time to buy a house in the three months to October, from 22 percent in the previous quarter, and a net 24 percent optimism a year earlier.

The index hit a seven-year high of 54 percent in mid-2009.

ASB said expectations of higher prices rose to 56 percent from 51 percent in the previous survey, and were now headed towards a record level of 61 percent seen in January 2003.

"We remain wary about the housing market in an environment where mortgage rates are likely to remain very low well into 2013 and risk further boosting demand in a supplyconstrained market," said ASB chief economist Nick Tuffley.

Earlier this month the Reserve Bank of New Zealand (RBNZ) warned that house prices, which have hit record levels in Auckland on tight supply, were overvalued.

Housing data from the Real Estate Institute of New Zealand (REINZ) and government agency Quotable Value have both shown prices nudging at or near record levels.

The renewed strength of the market has been seen as one factor likely to make the RBNZ reluctant to cut rates from the current record low 2.5 percent despite signs of an economic slowdown in the last quarter.

"We still see such a move as unlikely, with the state of the housing market likely to weigh on the mind of the RBNZ Governor," Tuffley said.

The latest Reuters poll of analysts has a clear view that the next move on rates will be a rise, most probably in the second half of next year.

The survey showed a fall in the number thinking rates will fall further, with a lift in those thinking rates will stay the same or rise.

Tuffley said the survey pointed to annual growth in house prices of around 4 percent over the coming year, although a shortage of properties may push up prices higher in Auckland.