Tuesday, 10 July 2012
Little change in consumer sentiment over property market
The results of the latest survey of the New Zealand housing market carried out by QV.co.nz shows that more people expect house prices to rise over the next twelve months than any of our previous surveys since 2009.
While fewer felt it was a good time to buy, many more felt it was a good time to sell compared to surveys over the past two years. Both of these results are a little at odds with current market activity, as sales volumes have been up considerably over the past few months, while the number of new listings has been dropping.
Property values and interest rates remain the main factors determining whether people intend to buy or sell property, while financial pressures and job security seem to be less of a factor than they were this time last year.
Despite more people believing that it is a good time to buy or sell, fewer are intending to do so over the next year. Of those that do intend to buy or sell, it tends to be in six months or more, suggesting that activity may quieten down over winter after a very active first few months of 2012.
Prices expected to increase during the next year, but not dramatically
A net 54% of respondents expect house prices to rise over the next twelve months. This is the most optimistic result since we began this survey in March 2009. This time last year only a net 13% expected prices to rise.
The breakdown of the latest survey is:
- 69% expect house prices to rise, up from 43% last June
- Only 15% expect prices to fall, down from 30% last June
- 55% expect values to increase 1‑5% remain the same, the highest level since the survey began in March 2009
- 12% expect values to increase 6‑10% which is higher than the 3% this time last year but below the level seen in 2009
Property values still the most common reason to buy or sell
Property values and interest rates remain the primary factors influencing decisions on whether to buy or sell. Job security and lending conditions have both lessened in significance, while a new question in the latest survey shows that for a third of people life/family changes are a factor.
The overall breakdown is:
- Property values: 53% listed this as a factor, 49% last year and only March 2009 at 55% is higher
- Interest rates: 36% (32% last June, and only 42% in March 2009 higher)
- Job security: 19% (23% last June, and only 15% in March 2010 lower)
- Financial pressures 17% (23% last year but at similar levels to 2009/10)
Fewer believe it is a good time to buy
In contrast to the increased sales activity we are seeing in the market at present, a net 44% believe now is a good time to buy, down from the net 52% last year. 14% don’t think it’s a good time to buy, staying at similar levels to the last 18 months. Fewer agree that it is a good time to buy and more are now neutral.
The breakdown is:
- 57% agreed or strongly agreed that now is a good time to buy (66% last June)
- 29% were neutral, down from 20% last June
- 14% disagreed or strongly disagreed (same as last year)
A big increase in whether it is a good time to sell
A net -1% of respondents believe that now is a good time to sell. This is a dramatic improvement on the -40+% seen over the past few surveys. Again, this is somewhat at odds with what we’re seeing in the market where the number of new listings is low.
The breakdown is:
- 35% agree or strongly agree that now is a good time to sell, up from 16% last June and 13% the June before
- 37% disagreed or strongly disagreed that now is a good time to sell. This is well below the 58% we saw last June and the June before
- 28% were neutral, similar to the 26% last June and the June prior
Fewer intending to sell their own home
In the latest survey 66% of respondents indicated they weren’t planning to sell their own home, up from 56% last year. Of those intending to sell in the next year more than half intend to wait at least six months.
The breakdown of those intending to sell is:
- 24% intend to sell within 3 months (similar to the 27% last June)
- 22% intend to sell in 3 to 6 months, similar to the 21% in the last survey
- 54% intend to sell in 6 to 12 months, again similar to the 52% last June
Little change in timing to buy
There seems to be little enthusiasm to buy or build homes with 59% of respondents indicating they had no such plans for the next twelve months, up from 53% last June. Of those that do intend to buy, the timing is generally later rather than sooner.
The breakdown for those intending to buy or build their own home is:
- 20% intend to buy or build within 3 months (26% last June)
- 28% intend to buy or build in 3 to 6 months (25% last June)
- 52% intend to buy or build in 6 to 12 months, similar to the 49% last June
Still few property investors intending to sell
More than two thirds of property investors have no intention of selling investment property in the next twelve months, a level similar to the past three surveys. Of those that are considering selling a few more intend to sell within the next three months than was the case in last June’s survey.
Of those intending to sell investment properties the breakdown is:
- 28% intend to sell within 3 months, up from 20% last June
- 23% intend to sell in 3 to 6 months (20% last June)
- 50% intend waiting at least 6 months, down from 60% last June
Slightly more investors intending to buy
37% of property investors intend to buy within the next year, up slightly from the 30% in last June’s survey. However the timing is more likely to be later rather than sooner.
The breakdown for those investors intending to buy is:
- 18% within 3 months (similar to the 20% last June)
- 13% in 3 to 6 months (down from 28% last June)
- 69% in 6 to 12 months (52% last June)
Intentions for rent increases unchanged
Most property investors intend to either keep rent levels where they are in the next six months or increase them by 1‑5%.
The breakdown is:
- 46% intend to leave rent the same, up slightly from 42% last June
- 37% intend to increase rent by 1-5%, down slightly from 42% last June
- 13% intend to increase rent by 6% or more, unchanged from last June
- Nobody intends decreasing rent