New Zealand house price expectations have collapsed to their lowest level since the 2008 Global Financial Crisis, according to ASB’s latest housing confidence survey:
The results for the three months to January sunk to a net -43% expecting higher house prices, compared to net -30% in the three months to October.
The GFC low (which was struck in the three months to July 2008) was a net -55%, according to ASB.
ASB notes that “house prices have already fallen by more in this cycle than they did during the GFC. And with more rate hikes to come, house price expectations could test GFC lows”.
The survey also shows that respondents once again think it’s a “bad” time to buy a house; although sentiment remain off recent lows:
Meanwhile, over three quarters (78%) of respondents expect higher interest rates over the next year.
Commenting on the results, ASB noted that “responses were impacted by the RBNZ’s fighting words at the November 2022 Monetary Policy Statement”.
“The RBNZ raised the Official Cash Rate by 75bp (a record hike) and warned more was on the way. Indeed, the RBNZ has since raised the OCR by another 50bp to 4.75%”.
“At the same time, housing market activity has continued to weaken. House sales tumbled into the end of 2022 and house prices continue to fall”.
“We maintain our house price forecast for a total fall of 25%, suggesting house prices have a further ~10% to fall in this cycle”.
The Reserve Bank’s latest Monetary Policy Statement forecast ongoing interest rate increases, a recession, and a 23% peak-to-trough decline in New Zealand house prices.
So basically, New Zealanders are mirroring the explicit forecasts of their central bank.
