• The past three months has seen a downturn in house price expectations
• And fewer people believe now is a good time to buy a house
• Expectations of higher interest rates remain

The housing market has had another strong run recently, but the signs are for slower times ahead. There are early indications that house sales turnover and price growth are starting to lose momentum. The results of the latest ASB Housing Confidence Survey point to further softening ahead: price expectations are falling and respondents are less convinced that now is a good time to be buying a house. One significant influence on the housing market is interest rates: ahead of the July 26 OCR increase three-quarters of respondents expected higher interest rates. The extent to which mortgage rates have risen this year will increasingly bite, and we expect the housing market will show noticeable signs of that impact over the remainder of 2007. The latest survey results suggest the RBNZ should be comfortable that it has done enough to slow housing and rein in inflation.

Please see the attached pdf file(s) for elaboration.

• HousingConfidenceJul07.pdf

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