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More people in New Zealand think now is a good time to buy property

The ASB housing confidence survey for the three months ending in January found that 53% of respondents think now is a good time to buy, up from 45% in the previous quarter.

This is despite 60% expecting house prices to go lower, compared with 55% previously. And just 15% think now is a bad time to buy, down from 21%.

Declining interest rate expectations continued to have a significant influence on attitudes towards the housing market, with lower prices also helping, the survey found.

But the lower mortgage rates and improvement in sentiment towards housing has not had much apparent effect on the housing market.

Reasons for the lack of recovery include little urgency among buyers given that they expected further price falls, while higher deposit criteria could be another factor, according to ASB chief economist Nick Tuffley.

'Increasingly an air of uncertainty about the direction of the economy is taking hold on decision making by all and sundry at present,' he said.

The lower interest rates may have put a floor under turnover and could help some recovery in housing turnover during the year, he added.

Despite that, he continues to expect house prices to fall for much of this year, though at a slightly more gradual pace than last year. Several structural issues argue against a strong rebound in house prices, Tuffley said.

House prices were still high relative to incomes and rental yields were still low in an absolute sense, even if they were starting to look attractive relative to interest rates, the report concludes.