This despite first-home buyers remaining active
The NZHL Property Report by independent economist Tony Alexander (pictured above), which gathers insights from real estate agents nationwide, has revealed a noticeable decline in buyer presence despite first-home buyers remaining active, as well as growing concerns over employment and interest rates among potential buyers.
Auction and open home attendance drops
The survey, which garnered 391 responses, showed a decrease in auction attendance, with a net 6% of agents noting fewer attendees, a contrast to the positive attendance from June to late January.
Similarly, open home attendance has also seen a decline, with only a net 9% of agents observing more visitors, significantly lower than the net 57% in late January.
“This tells us that for the moment a new wave of caution has swept through potential home buyers,” Alexander said.
Property prices and FOMO trends
For the first time since June, more agents feel property prices are falling rather than rising in their areas, albeit by a weak margin.
Furthermore, the fear of missing out (FOMO) among buyers has significantly decreased, with only 11% of agents observing it, down from 23% in late January.
“Buyers feel in no hurry to make a purchase and do not feel that delaying will necessarily cost them,” Alexander said.
First home buyers vs. investors
First-home buyers have sustained the market’s upturn since mid-2023, remaining active, though their presence has decreased to 43% from last month’s 55% and a peak of 66% in August. Meanwhile, investor activity has declined, with a net 5% of agents reporting fewer investors, attributed to concerns over high costs, interest rates, and cash flow.
Offshore enquiries and seller motivations
Offshore inquiries have decreased, with a net 21% of respondents reporting fewer inquiries from abroad, halting the positive trend that began in early 2023.
However, property appraisal requests are still high, with a slight decrease to a net 61% of agents reporting more requests from potential sellers this month, down from last month’s record 76%. This suggested motivated sellers continue to outnumber motivated buyers.
“The increase in supply has taken away feelings on the part of buyers that they need to hurry,” Alexander said.
Economic concerns affect buyer sentiment
A sharp rise in buyer worries about interest rates and a significant increase in concerns over employment and income signal a cautious market outlook.
“This is the highest reading since September 2020, and it tells us that the weakening in the economy sought by the Reserve Bank may at last be affecting people’s feelings of job security,” Alexander said.
Investor activity and market outlook
A record number of agents reported more investors looking to sell, driven by cash flow pressures despite the return of 80% interest expense tax deductibility.
As the market adjusts to these conditions, the future remains uncertain, with Alexander suggesting that the Reserve Bank’s actions and economic factors will continue to influence buyer and investor decisions in the coming months.
Read the NZHL Report in full here.
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