More New Zealand consumers expect house prices will rise in the next year as demand during a period of record-low interest rates outstrips supply, according to ASB Bank Ltd.
Sixty-one percent of respondents in July expected prices will increase over the next 12 months compared with 57 percent in April, Auckland-based ASB said in an e-mailed report based on a survey. The proportion who expected prices will fall was little changed at 11 percent.
Rising home prices may further boost consumer confidence, which rose to a seven-month high in August, according to an index published last week by Australia & New Zealand Banking Group Ltd. and researcher Roy Morgan. Property values are being stoked by a shortage of homes for sale, particularly in Auckland, home to a third of New Zealand’s 4.4 million people.
“The dominant feature of the market is a low level of supply, with inventory approaching record lows in Auckland but also declining through the rest of the country,” ASB Chief Economist Nick Tuffley said in the report. “Prices are rising at a steady but moderate pace, and that is likely to continue.”
A net 22 percent of consumers said it was a good time to buy a house compared with 21 percent in the April report, the survey showed. The net figure subtracts pessimists from optimists.
Still, in Auckland optimism fell to 12 percent as shortage of homes for sale squeezes buyers, Tuffley said.
The Reserve Bank of New Zealand has held the nation’s official cash rate at 2.5 percent since March 2011, and all 16 economists in a Bloomberg survey published July 23 predicted the benchmark will stay at that level until next year.