Market has settled down, economist says
Independent economist Tony Alexander’s latest NZHL Property Report, based on input from real estate agents nationwide, has revealed that buyers are active but not rushing, prices are going up steadily, many buyers struggle with getting finance, and more investors are thinking about selling rental properties.
People showing up at auctions and open homes
In the latest survey, comprising 387 responses, a net 22% of agents noted a rise in auction attendance. This figure closely mirrors the net 21% reported in the previous survey conducted two months ago.
“What the outcomes recently tell us is that there was a distinct change in the market in the middle of 2023 but since that step-shift things have settled down for now,” Alexander (pictured above) said.
Agent feedback underscored access to finance as a notable obstacle for many buyers, contributing to a substantial number of deals falling through.
Meanwhile, a net 57% of agents have recently observed an increase in open home attendance, indicating a significant rebound from the comparatively low net 23% recorded two months earlier.
This trend suggests a strong buyer interest in the market, Alexander said. Notably, open house attendance appears particularly robust in regions such as Hawke's Bay, Manawatu-Wanganui, Wellington, and Queenstown.
Assessing current price trends
In New Zealand, a net 26% of agents perceived rising prices in their areas, consistent with November’s net 28% result, suggesting a stable pace of increase. This trend, aligned with open home and auction attendance, reflects positivity without runaway growth. However, challenges persist for property buyers, the NZHL Property Report found.
Insights on FOMO
In this month’s survey, 23% of agents observed buyers exhibiting signs of FOMO (fear of missing out), marking the lowest level since July last year. This suggests that buyers currently perceive less urgency in making quick purchases, indicating a weaker upward market momentum. Notably, FOMO appears to be relatively low in Northland and Waikato.
First-home buyer activity
There continued to be a notable presence of first-home buyers in the residential real estate market, with a net 55% of agents reporting an increase in young buyers, consistent with trends observed since May last year. This data indicated that while buying activity surged in mid-2023, it has since stabilised with upward but not accelerating momentum.
Investor presence and offshore interest
Observations regarding investor presence saw a shift towards positivity in mid-last year alongside other upward trends. However, it wasn't until the end of September that more agents reported seeing more investors than fewer. Despite this, investors maintain a relatively mild presence due to constraints posed by sharp cost increases.
On the other hand, offshore interest in New Zealand residential property has seen improvement since the beginning of 2023. This trend continued this month, with only a net 8% of agents noting a decrease in offshore inquiries, an improvement from late November's net 17%. Although there are reports of increased interest from offshore Kiwis, their impact on the market remains limited, except possibly in Dunedin.
Regarding property appraisals, this month’s survey revealed a record net 76% of agents noting an increase in requests for property appraisals. This suggests that listings availability may remain robust during the first half of this year in many parts of the country.
Buyer concerns and market trends
Currently, buyers are primarily concerned about gaining access to finance, followed closely by worries about interest rates and insufficient listings.
Over the past three and a half years, concerns about falling prices have decreased significantly, now settling near 12% of agents rating this as a key concern. Although concerns about listings rose during mid-2023, they have since stabilised as buyers have met their initial demand and more vendors have entered the market.
Concerns about the availability of finance from banks have remained largely unchanged, with credit accessibility remaining challenging for many prospective buyers, leading to failed purchase deals, as noted by agents.
While worries about interest rates have recently decreased, with only 43% of agents citing this as a major concern, it marks the lowest reading since September 2021. Additionally, despite a rise in the unemployment rate from 3.2% to 3.9%, the state of the labor market does not appear to be a significant concern for buyers at this time.
Investor activity and demand
According to a net 14% of agents, investors are listing more properties for sale, marking the highest reading on record. Despite impending tax changes, many investors seem inclined to reduce their presence in the rental sector.
Investors are mainly motivated by the prospect of securing a bargain in the residential property market. Additionally, there’s a slow upward drift in the proportion of agents who believe investors are driven by the goal of providing for their retirement, the NZHL Property Report found.
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