Battered Kiwis abandon sinking New Zealand housing market

ASB’s latest Housing Confidence Survey shows that Kiwis “housing confidence has finally cracked”, with confidence falling to a 13-year low amid rising mortgage rates and heavy price falls:

With the housing downturn now plain to see, and house prices around 8% off their peaks, confidence is finally crumbling.

In particular, “the percentage of kiwis expecting house prices to keep rising over the next 12 months has plummeted from a net 11% expecting them to increase last quarter, to a net 31% expecting them to decrease in the three months to July”:

House price expectations fall to 13-year low.

Confidence has crashed across all major regions of New Zealand:

North Islanders (ex-Auckland) are now the most downbeat on house price prospects with a net 35% of respondents expecting house prices to fall. This looks like a Wellington story, with the capital experiencing the largest pull-back in house prices to date (down 14% from the peak, seasonally adjusted). By contrast, Auckland (net 28% expecting house price falls) and Canterbury (net 23%) are slightly less gloomy…

A net 9% of respondents feel it’s a bad time to buy a house…

Kiwis also expect interest rates to continue rising, with expectations at record highs in the three months to July:

A full 84% of surveyed respondents expect interest rates to keep rising over the coming 12 months, with just 3% expecting them to decrease…

It takes a while for higher mortgage rates to work their way through the system. The effective mortgage interest rate – the average rate currently being paid by mortgage borrowers – is set to keep grinding higher through the remainder of this year and 2023 as borrowers roll off lower rates.

Accordingly, ASB believes “housing confidence looks set to remain in the doldrums for a while yet” and is tipping further price falls.

After experiencing one of the world’s biggest price booms over the pandemic, New Zealand’s housing market is now facing one of the biggest busts.