FEATURES • HOUSING COMMENTARY
Govt torpedoes fail to sink market Despite the Government’s best intentions and policy shifts Kiwi’s positive expectations of house price growth are hard to sink, Sally Lindsay writes.
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here has been a further modest decline in ASB’s housing confidence survey, but Kiwi’s perceptions of house price growth remain around a level seen during the peak of price confidence in past housing booms. The latest ASB survey shows in the three months to July a net 58% of people expected house prices to rise over the following 12 months, down from a net 64% in the three months to April and a net 73% historical peak in the three months to January. The current net balance is made up of 65% expecting prices to increase and 7% expecting declines. This is despite widespread predictions from economists of a slow down or even a price drop. Because of this hard-to-shift mindset about house prices, the ASB has revised its annual growth upwards to 22% this year, mainly reflecting how resilient prices have been to date.
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TMM 03 • 2021
ASB chief economist Nick Tuffley says, however, the tide is going out, and there will be just 2% growth next year as price growth becomes dead in the water. From a government policy perspective, a number of torpedoes have been fired at the housing market this year and a fresh salvo is being loaded into the tubes. As yet the housing market has only taken on a little bit of water: month-to month growth has slowed only slightly from its February/March peak frenzy, and annual house price growth has hit 30%. It is of little surprise that perceptions of whether it is a good or bad time to buy a house are still weak, says Tuffley. A net 20% of respondents see now as a bad time to buy, little changed from a net 21% in the three months to April. The latest result had 11% of respondents seeing now as a good time to buy a house, with 31% seeing it as a bad time (making the net -20%). Interestingly, Auckland is less downbeat overall with a net 13% seeing now as a bad
time to buy, against a net 25% “bad” for the rest of the North Island and a net 21% “bad” for the whole of the South Island.
Climb continues August’s lockdown threw up some surprising results in the housing market. While sales were down 26.5% from last August, house price growth hit a new record of 31.1% across the country. House prices appear impervious to anything thrown at them. According to the REINZ House Price Index (HPI), prices still managed to climb 2% in August. However, the data was distorted by lockdown and will remain so while Auckland is in level four lockdown, says Kiwibank’s economics team. Median prices for residential property across the country increased by 25.5% from $677,400 in August last year to a record $850,000 last month, REINZ data shows. Four from 16 regions reached new
