The market may not yet be at the bottom, but new survey shows conditions are no longer getting worse
Real estate agents have continued to report hesitant buyers and continuing deep buyer worries about prices falling further, high interest rates, and access to credit, despite few convincing signs of the market bottoming out.
This was according to the REINZ & Tony Alexander Real Estate Survey, which collects the views of licensed real estate agents all over New Zealand regarding how they are seeing conditions in the residential property market in their areas at the moment.
Auction rooms around the country remained relatively quiet, with only a net 18% of the 471 respondents reporting seeing fewer people showing up. In contrast to the continuing deep weakness in auction attendance, open home attendance has stabilised for the first four months of the year, with a net 3% of agents reporting more people were attending open homes.
Agents continued to feel that prices are falling, as reported by a net 58% of agents, the same as the previous three months, which according to Alexander (pictured above), “tells us it is very unlikely that when REINZ release their April data, the numbers will show that prices are rising.”
The survey found an upward trend underway in the proportion of agents who feel that “fear of missing out” is being felt by buyers, although the latest reading of 7% still indicated minimal concern by buyers that they’ll end up missing out if they wait.
For the third month in a row, a net 22% of agents reported seeing more first-home buyers in the market.
“These generally young buyers are likely to be motivated by the changing equation between renting and buying as rents continue to rise but prices have substantially declined,” Alexander said. “They are also likely to feel confident in their incomes and in many cases will have built up larger deposits which can help reduce debt needed and dampen the impact therefore of higher interest rates.”
Property investors, meanwhile, remained out of the market, with a net 44% of agents reporting seeing fewer investors this month – a result consistent with others since March 2021 just after tax changes for investors were announced.
“This clearly shows the effectiveness of this policy in reducing investor demand for property yet also helps explain the results from my separate survey with Crockers Property Management showing rising rent pressures and growing ease of finding good tenants,” Alexander said.
“The rental pool is not being grown and this can be attributed to at least this government tax policy change. The beneficiaries for now of the tax change are other buyers. But the price will be paid by renters.”
There continued to be very little interest in NZ property from people located offshore, with a net 39% of agents reporting reduced interest from offshore this month.
A net 5% of agents have noted that they were receiving fewer appraisal requests, which according to Alexander showed property listings “are in the process of trending down.”
Interest rate levels, the potential for prices to fall further, and access to finance continued to be the main concerns of buyers.
And for those few investors who were thinking about buying, their biggest motivation is the hope of finding a bargain. Buying for retirement is low as a driving factor, this month’s joint survey showed.
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