Below is an edited extract of Economist Tony Alexander’s latest REINZ survey of licensed real estate agents.
This survey suggests that buyer concerns about high interest rates, access to credit, and prices falling after buying are easing but remain at elevated levels. So while the market overall continues to weaken, the seeds are being sown for a mild recovery some months from now.
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ARE MORE OR FEWER PEOPLE SHOWING UP AT AUCTIONS?
In this month’s survey a net 16% of responding agents have reported that they are seeing fewer people showing up at auctions. The result is weak, but it is the least weak outcome since October last year when the credit crunch was rapidly growing.
There have been some anecdotal reports of more people appearing at auctions, including some who have recently had their working visa changed to residency and for whom purchasing a home is now legally possible.
ARE MORE OR FEWER PEOPLE ATTENDING OPEN HOMES?
For the first time since February 2021 our survey has revealed more real estate agents saying they are seeing increased numbers of people attending open homes than say that they are seeing fewer. A net 7% have reported higher open home attendance. This is a strong contrast to the net 79% of agents who in February said that fewer people were appearing at open homes.
HOW DO YOU FEEL PRICES ARE GENERALLY CHANGING AT THE MOMENT?
Agents still on average see prices falling in their location. A net 47% have reported prices as falling, only slightly better than the net 66% of late-July. The still very weak result tells us that for the moment, even though more people are attending open homes, buyer demand remains weak. But there is a decreasing trend of price negativity now established.
DO YOU THINK FOMO IS IN PLAY FOR BUYERS?
FOMO = Fear of missing out
For the fourth 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 has been essentially absent from New Zealand’s residential real estate market since the start of this year. Buyers feel near zero need to hurry their purchase.
ARE PROPERTY APPRAISAL REQUESTS INCREASING OR DECREASING?
This month’s survey has revealed a very strong change in the proportion of agents reporting more people asking for property appraisals. A net 20% of agents have reported more requests compared with a net 13% last month reporting reduced enquiries. This result could be another signal of vendors capitulating to the reality of a weaker market not able to deliver prices achievable late last year, and moving to get on with their lives rather than holding off.
WHAT ARE THE MAIN CONCERNS OF BUYERS?
The main thing which agents report buyers as being concerned about is rising interest rates – noted by 72% of responding agents. Next come difficulties accessing finance reported by 67% of agents, and worries that prices will fall after buying reported by 66%.
Worries about interest rates increased firmly from early last year when we started offering this option. But they have just fallen by a firm amount from the 82% reading of late-July. Worries about financing costs are easing.
So too are worries about access to finance and prices falling after buying. Note the slight lift in the proportion of agents reporting concerns about insufficient listings. This measure may be worth paying close attention to in the next six months because although the current stock of listings is 107% higher than a year earlier, it is still 19% below the average stock since 2007 and 36% lower than ten years ago.
