Rate rise no put-off:Survey

More than two thirds of consumers are confident that New Zealand residential real estate prices will rise in the coming six months. A quarter of those surveyed believe average real estate prices will remain the same, while less than one percent believe prices will fall, the survey by allrealesate shows.

The quarterly Consumer Confidence Survey for March 2007 found:

• More than half (62.2%) or respondents were actively looking to buy a property to live in, while a quarter (20.4%) were seeking an investment property. One in 10 were monitoring the market.
• 82.2% of respondents believe residential real estate values will rise in the next six months, while 25.2% believe property values will remain the same.
• 68.8% of respondents said the recent interest rate rise had no impact on them, with 62.2% indicating the recent rate rise would not deter their decisions to buy in the next six months.
• 35% of respondents are seeking a home in the $300,000-400,000 price range, 30% are seeking a property valued $500,000 or more and 20% are seeking a property priced between $200,000-300,000. Just 15% are seeking a property valued less than $200,000.

Allrealestate general manager Shaun Di Gregorio suggests New Zealander’s continued love affair with property, regardless of medium property price doubling over the past 10 years, can be attributed to several factors.

“When you think about other countries, we are in a pretty good position – we have no stamp duty and no capital gains tax, well at least for 10 years.

“On the flip side, we don’t have compulsory superannuation, nor the mega superannuation funds to put our retirement money into, so the combination of these factors makes property investment a very attractive option.”

The current shortage of rental properties and the resulting escalation of rents also seems to be a factor. More than half (57.3%) of the respondents indicated they are considering purchasing a property to rent out, in particular investors and to a lesser extent those monitoring the market.

“The fact that mortgage rates are more often than not favourably fixed is another driver that may be enticing buyers into the housing market. Already, 58.2% of the survey respondents are paying off their home.
“It would seem the Reserve Bank’s effort has had little impact on curbing spending on real estate in the short-term,” Di Gregorio said. “Not with nearly a third of respondents declaring their intentions to buy a new home in the next six months despite the recent rate rise.