Report highlights impact of housing reforms
It has been several months since the government announced new housing reforms to make home-buying less attractive to investors. Now, a joint survey by economist Tony Alexander and the Real Estate Institute of New Zealand (REINZ) has determined what impact those reforms are having on investor activity.
The joint survey gathered the views of licensed real estate agents across New Zealand regarding how they see the current conditions in the residential property market in their areas – particularly activity levels, views of first-home buyers (FHBs) and investors, and factors affecting sentiment on both FHBs and investors.
According to Alexander and the REINZ, a high net 52% of agents reported seeing fewer investors in the market, a sign that the policy changes from the government and the Reserve Bank of New Zealand (RBNZ) were successful in “cooling the fervour of investors.”
A net 3% of agents reported seeing fewer investors looking to sell their property – the lowest reading since late November and well away from the net 12% who reported seeing more investors looking to sell in late April.
“That may help explain why this month, a net 53% of agents have reported that prices are rising in their area compared with a net 32% last month. And a gross 60% now report that they are seeing buyer FOMO (fear of missing out) compared with 51% late in May and 49% two months ago,” the report said.
Read more: REINZ reveals highest-performing region in New Zealand
More agents reported seeing fewer people attending auctions compared to those reporting more people in attendance.
“This does not suggest that buyers are as yet returning to the market, just that their speed of withdrawal is slowing down as time passes since the March 23 tax policy change announcement, and the media continue to report market strength and rising prices around the country,” the report said.
Meanwhile, a net 20% of the respondents saw fewer people attending open viewings compared to last month. A net 4% of agents reported seeing fewer FHBs in the market, mainly young people continuing to exercise caution as they take on board a significant number of new factors such as questions about the impact on investor buying and selling, loan-to-value ratio (LVR) changes, as well as predictions of rising interest rates.
According to a gross 82% of agents, buyers are mainly concerned about a shortage of listings – only marginally below the record of 83% in late January. The respondents stated that some buyers were concerned about prices falling after they purchased a property.
Concerns continued to trend slowly downward regarding worries about jobs and incomes. In addition, worries about high prices (requiring high debt) have risen slightly, while concerns about increasing interest rates have increased.
