ASB Bank survey: NZ housing confidence eases in 3Q

WELLINGTON: Confidence in New Zealand's housing market eased in the three months to October, but prices and interest rates are expected to rise as the economy shows cautious signs of emerging from recession, an ASB Bank survey showed on Nov 16.

The survey showed a net 48% said it was a good time to buy a house, compared with 54% in the previous survey. "The latest survey results are consistent with responses normally seen during a very upbeat housing market," said ASB chief economist Nick Tuffley.

He said the main issue facing the market was the lack of supply, and it was becoming a sellers' market leading to higher prices.

"House prices are likely to continue rebounding into early 2010. But changes on both the demand and the supply side will sap the momentum of prices," Tuffley said.

Rising interest rates and an increase in the supply of houses, including the building of new houses, were likely to bring the supply and demand better into balance.

The most recent industry data showed the number of sales in October up 36% on a year ago, with prices 6% higher than the previous year.

However, last week the Reserve Bank of New Zealand (RBNZ) warned that the economy did not need a return to a debt fuelled housing boom as occurred before the recession.

The RBNZ has held interest rates at a record low of 2.5% for the past four months and said it expects to hold them there until the second half of next year, although financial markets have priced in a start to the tightening cycle from March next year.

New Zealand emerged from the 15-month recession in the three months to June with growth of 0.1%, although the RBNZ and economists have said the recovery will likely be slow and patchy. – Reuters