The Reserve Bank of New Zealand’s aggressive interest rate hikes, which have lifted the official cash rate to 5.25%, have already knocked the stuffing out of the nation’s housing market.
House prices nationally have plunged nearly 17% from their November 2021 peak, with Auckland values down a massive 22%:
Sales volumes have also collapsed, with Barfoot & Thompson – the nation’s largest real estate agency – recording its worst April sales in 22 years.
In his latest survey of real estate agents, independent economist Tony Alexander, notes that “agents continue to report hesitant buyers and continuing deep buyer worries about prices falling further, high interest rates, and access to credit”.
This suggests the housing market will get worse before it gets better.
The key results from this month’s survey include the following:
- No upward trends as yet in auction or open home attendance.
- Agents still overwhelmingly feel that prices are falling.
- First home buyers are back but investors remain on the side-lines.
- Buyer concerns about access to finance are slowly easing, but worries about interest rates remain elevated.
Auction rooms around New Zealand remain quiet, with a net 18% of the 471 agents responding in this month’s survey reporting that they are seeing fewer people showing up:
Attendance at open homes remains subdued. But at least the picture here has stabilised:
A net 58% of agents still feel that prices are falling.
Agents also reported that buyers are making lowball offers for properties which vendors continue to refuse:
There continues to be minimal concern by buyers that if they wait they will end up missing out on either a low price or a suitable property.
Buyers continue to feel that time is on their side:
Finally, home buyers remain most concerned about high interest rates, prices falling after they purchase, and difficulties obtaining finance:
Overall, this survey suggests house prices will continue to fall, which is unsurprising given the Reserve Bank’s hawkish interest rate stance at the same time as the economy is entering recession.
