Housing market confidence has taken a hit, with sentiment dropping to a four year-low in the face of surging prices, tight supply, and tighter lending rules.
More people believe it is not a good time to buy a house, the ASB survey found. Photo: 123RF
The latest ASB Housing Confidence Survey found a net 20 percent of people surveyed in the three months to July believed it was a bad time to buy compared with a net 3 percent three months earlier.
Sentiment is particularly low in Auckland, with a net 32 percent thinking it was not a good time to buy.
People believed interest rates had hit bottom and would rise over the next year, along with house prices, the survey found. The Reserve Bank this month cut the Official Cash Rate to a record low 2 percent.
"People appear to be wary of higher debt servicing costs on top of already-high house prices, which has pushed down sentiment," said ASB chief economist Nick Tuffley.
He said sentiment might turn even more negative when new Reserve Bank lending restrictions came into force in October.
"The requirement for investors around the country to have a 40 percent deposit will undoubtedly knock investors' confidence."
If the market was to slow because of the new lending restrictions and interest rates fell further, first home buyers might become more confident and willing to enter the market, Mr Tuffley said, although it was likely sentiment would remain under pressure this year.
