Prominent economist Tony Alexander has released new survey datasets on New Zealand’s housing market, which have been summarised below.
Alexander believes New Zealand housing is “weak and getting weaker”, with more price falls likely over coming months.
____________________________________________________________________________________________
New Zealand’s housing market is weak and getting weaker. The number of sales in June was down 38% from a year earlier. The average number of days taken to sell a dwelling was 13 longer than a year before. The stock of properties listed for sale at the end of the month was 104% higher than a year ago.
House prices so far have fallen by 9.5% from their November nationwide peak and they probably have further to go.
The results from my various surveys all show that we should expect weakness to continue over the next few months.
For instance, from my monthly Spending Plans Survey we see that a record net 4.5% of people are planning to pull back on plans for buying a house to live in.
A record net 12.5% plan spending less on an investment property…
And from my monthly survey of residential real estate agents undertaken with REINZ we can see a net 66% say prices are falling in their areas.
A net 51% say that fewer people are showing up at auctions and a net 47% say that fewer are showing up at open homes…
Like most of our other indicators, this tells us quite clearly that the market is weak and in favour of buyers. But, like a handful of our other measures, this one is becoming less negative. That does not mean the market is improving — just that the intensity of new weakness appears to be easing off…
For the third month in a row, only a gross 4% of real estate agents have reported that they see buyers worried about missing out on a purchase. FOMO essentially disappeared in February and is showing no signs of returning as yet… A net 69% of buyers are reported by agents to be displaying FOOP (fear of
over-paying). But like a reasonable number of our measures, this gauge is becoming less negative…
Real estate agents continue to report declining numbers of first home buyers in the market. But, at a net 36% reporting so this month, the result is the least negative since October just before the credit crunch hit…
A net 60% of agents report that they are seeing fewer investors in the housing market as buyers…
There continues to be less and less interest in New Zealand property coming from outside the country. A net 55% of agents this month have reported receiving fewer offshore enquiries…
The thing which most concerns home buyers are rising interest rates (reported by 82% of agents), followed closely by access to credit — 78%. A high 69% of agents report that buyers are worried about overpaying for their property. This FOOP reading (fear of overpaying) is down slightly from a peak of 73% in May…
It all looks pretty grim, especially in the context of
- near record low levels of business and consumer confidence,
- above average mortgage rates,
- the biggest hike in the cost of living since 1990,
- net migration outflows,
- collapsing developers, and
- a soon to start collapse in the number of consents being issued for new dwellings to be built…
Overall, the survey results show that the residential real estate market around New Zealand remains weak. However, the degree of that weakness is showing early signs of pulling back. It will be interesting to see how things develop in the second half of the year as mortgage rates potentially start edging lower
