New Zealand’s housing market will recover slowly, while a shortage of new construction is likely to bolster prices, ASB Bank Ltd. said, citing the results of a July survey.
The proportion of respondents expecting higher home prices rose to 44 percent from 35 percent in the previous survey in April, Auckland-based ASB said in an e-mailed report today. Forty percent said now is a good time to buy a house, unchanged from the previous survey.
“We expect nationwide house prices will increase at a modest annual rate of 3 percent heading into 2012,” ASB Chief Economist Nick Tuffley said in the report. “The continued low level of residential building consent issuance raises the risk of an undersupply of housing over the coming years. This will likely provide support for prices.”
Home-building approvals fell 26 percent in the six months ended June 30 from a year earlier, adding to a shortage of new homes that will bolster prices. Variable home-loan interest rates are at a 46-year low, according to central bank figures.
Still, the percentage of respondents in ASB’s survey expecting higher home-loan interest rates over the next 12 months rose to 54 percent from 46 percent, the bank said.
The increase in rate expectations means ASB’s overall housing confidence gauge declined, Tuffley said.
Since the survey, volatility in global financial markets has led to a reduction in bets the central bank will raise the official cash rate from a record-low 2.5 percent, he said.
There is a 28 percent chance of a quarter-percentage-point rate increase at the Sept. 15 policy meeting, down from 144 percent on Aug. 1, according to a Credit Suisse Group AG index based on swaps trading.