"We are back into a buyer’s market again," economist says
The New Zealand housing market is experiencing a significant shift back to a buyer’s market, as recent rate hike rumors have contributed to a market slowdown, according to Tony Alexander (pictured above), independent economist.
Alexander’s latest survey of real estate agents, in collaboration with NZHL, revealed a decrease in buyer urgency and an easing of prices in many areas for the first time since mid-2023.
Fading FOMO and growing concerns
The fear of missing out (FOMO) among buyers has drastically reduced, with only 10% of agents noting this behavior, down from 23% a month ago and 40% in October. This change suggests a cooling market where buyers are more hesitant to make purchases.
The market’s recovery from June last year has seemingly stalled, Alexander wrote in OneRoof, with the survey revealing several reasons why.
Growing job security concerns
Weak economic growth is impacting job security, making buyers hesitant. The proportion of agents noting buyers’ worries about jobs and incomes has jumped from 10% to 23% in a year, reducing household spending and mortgage commitments.
Resurgence of interest rate fears
Despite recent cuts in fixed mortgage rates, 61% of agents report a comeback in buyer concerns over interest rates, up from 43% just a month ago.
This shift coincides with debates about potential cash rate rises, despite banks making minor cuts to fixed mortgage rates. Alexander suggested that these mixed messages have confused the property market and contributed to the current slowdown.
Changing buyer and seller dynamics
The market dynamics have shifted, with a previously building queue of buyers now overtaken by a more eager queue of sellers.
This shift has led to a significant increase in residential listings, making it a challenging environment for builders and potentially worsening the construction outlook amidst rapid population growth.
With an abundance of existing properties available, the incentive for new construction diminishes.
Alexander warned that this trend, coupled with migration-driven population growth, could lead to a more pronounced housing shortage, affecting prices in 2025 and 2026.
“We are back into a buyer’s market again,” Alexander said.
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