Fewer New Zealand consumers expect house prices to rise over the next 12 months as a slowing economic recovery curbs demand and prompts people to reduce their debt, according to a survey by ASB Bank Ltd.
Thirty-three percent of 2,835 people polled in October forecast prices will increase over the next year, down from 38 percent in an August survey, Auckland-based ASB said in an e-mailed report today. Those expecting prices to fall increased to 25 percent from 19 percent.
Declining confidence in a housing rebound adds to signs domestic demand will remain weak and a recovery won’t accelerate until next year. Central bank Governor Alan Bollard kept the official cash rate unchanged at 3 percent in October citing a “muted” property market and is unlikely to increase borrowing costs until at least March, according to a Bloomberg News survey of 14 economists.
“Recent data shows signs of continuing slowing in housing activity,” ASB Chief Economist Nick Tuffley said in the report. He expects prices will fall at least 3 percent this year and any recovery in 2011 will be slow.
House prices fell a second month in October while house sales fell 36 percent from a year earlier, according to Real Estate Institute figures on Nov. 11.
The number of consumers who said it is a good time to buy a house was little changed at 41 percent, ASB said today. Sixty-five percent of consumers surveyed by ASB expected higher borrowing rates while 3 percent expected declines.