12 May 2015

Bad time to buy a house, public believe

12:50 pm on 12 May 2015

The number of people who think it is a bad time to buy a house has risen because of a fear of higher interest rates and escalating prices.

A lot in Faringdon, Rolleston Town, is sold.

Photo: RNZ / Diego Opatowski

The latest ASB Housing Confidence Survey found 21 percent of 2331 respondents believed it was a bad time to buy a house compared to just 13 percent who believed it was the right time.

In addition, 27 percent expected interest rates to rise compared to 16 percent who expected them to fall.

ASB senior economist Chris Tennent Brown said that was surprising considering the expectation the Reserve Bank would cut interest rates next month.

"There certainly has been a lot of talk about the potential for the RBNZ to cut the cash rate as their next move, and mortgage rates have been coming down over the last couple of quarters," he said.

"But at the moment people are still thinking that rates could go up, so we'll be looking with interest at the next quarter survey to see how much those expectations change."

ASB chief economist Nick Tuffley said the 21 percent who believed it was a bad time to buy was the worst reading in several years.

"We tend to find that when the housing market is going hot, that people tend to view that it's actually a bad time to buy, perversely enough," he said.

Urban development specialist Hugh Pavletich said he expected prices to start falling

"Auckland could still rise a bit further but the medium to long-term trend is likely to be that house prices will come down," he said.

"We're already starting to see that here in Canterbury, with the degree of production of new housing - about 550 to 600 coming on a month."

Mr Pavletich also expected interest rates to rise.

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