The Real Estate Institute of New Zealand’s (REINZ) latest house price index showed that values nationally have fallen more than 15% from their November 2021 peak.
The latest survey from independent economist Tony Alexander, in conjunction with the REINZ, shows that housing indicators remain weak, suggesting prices will continue to fall in the period ahead.
This is in line with the Reserve Bank of New Zealand’s (RBNZ) forecast, which expects house prices to fall 23% peak-to-trough.
Below are key extracts from Tony Alexander’s survey.
KEY POINTS:
The key results from this month’s survey include the following.
- An above average net proportion of agents report that they are seeing more first home buyers in the market — but investors remain solidly absent.
- A still high proportion of agents report that prices are continuing to decline in their location.
- Buyer concerns about accessing finance are high but on a downward trend. Few agents feel that buyers have concerns about their employment income.
ARE MORE OR FEWER PEOPLE SHOWING UP AT AUCTIONS?
This month’s survey continues to show that real estate agents around the country are observing low attendance at auctions. A net 17% have reported seeing fewer people in attendance. This is better than a net 33% at the end of January but still well away from positive territory. Attendance has been viewed as weakening ever since early-2021 when LVRs returned and tax rules were changed for investors.
ARE MORE OR FEWER PEOPLE ATTENDING OPEN HOMES?
In contrast to the continuing deterioration in auction attendance observations, there is a small improvement underway in open home visitations. A net 4% of agents have reported seeing more people at open homes. The result is low but it confirms the improvement seen in the previous month. There are some more people kicking the tyres of properties they might potentially buy — an early indicator of a turning in the residential real estate cycle but by itself not strong enough to allow one to say such a turning is imminent.
HOW DO YOU FEEL PRICES ARE GENERALLY CHANGING AT THE MOMENT?
There is no sign that prices for residential property around New Zealand have bottomed out let alone turned upward. A still very strong net 57% of agents have reported that prices are going down in their area.
This is statistically unchanged from 59% a month ago and as the graph shows is in line with the weakness in place since the turning of 2021-22.
DO YOU THINK FOMO IS IN PLAY FOR BUYERS?
FOMO = Fear of missing out
There continues to be no sign of FOMO returning to the real estate market in New Zealand. Only a gross 5% of agents have reported seeing FOMO, statistically the same result as for every other month in the past year.
WHAT ARE THE MAIN CONCERNS OF BUYERS?
Buyers have worries that prices will fall after they make a purchase, access to finance, and the level of interest rates. Very few feel that there are insufficient listings and worries about employment are minimal.
The light blue line in the following graph shows that concerns about access to finance are declining slowly as each month goes by. Worries about prices falling remain high but are edging slightly lower.
Concerns about rising interest rates might also be easing but it seems too early to definitively conclude that on the basis of our survey’s results.
