ANALYSIS: A few days ago, I conducted my final pre-election monthly survey of real estate agents around New Zealand aimed at gleaning coalface insights into how the market is tracking as we approach summer. In three words – flat to falling.
Only 6% of agents feel that buyers are displaying a fear of missing out if they delay their purchase. This FOMO reading is about the same as in each for the previous seven months and down from the very brief high of 26% reached at the end of November last year before the latest Middle East war and rises in wholesale interest rates occurred.
With regard to prices a net 36% of agents say that they are still falling in their area of operations. What this means is 54% say prices are steady, 41% say they are falling, and only 5% say they are rising.
This is not to say that there is a massive absence of buyers. A net 30% of agents still say that they are seeing more first-home buyers in the market. This group has been the key area of demand since early 2023.
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In contrast, a net 47% say that they are seeing fewer investors. For this group the desire to buy has been hit by rising costs for the likes of insurance and council rates, reduced ability to borrow, reduced depreciation allowances, rule changes which mainly favour tenants, and more recently reduced expectations for capital gains. Worries about policy changes should a centre-left coalition win the election are also in play for some.
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It is worth noting also that a net 28% of agents say that they are seeing more investors looking to sell. One factor behind these selling desires will be the simple passage of time bringing older investors into the time period when they always planned selling in order to finance their retirement – with extra encouragement from high inflation making that retirement more expensive than expected.
In fact, given the way prices have surged for basic expenses like rates, insurance, electricity and food, it is unlikely any spreadsheet developed these past four decades to estimate what people will be spending in retirement has proven correct.
I ask agents about the things which buyers seem to be concerned about. On average, since I started the survey in the middle of 2020, 30% of agents have said the stock of listings occupies buyers’ minds. Now only 14% say that is a worry and that is easy to understand given the high number of properties currently listed for sale.
Independent economist Tony Alexander: "Since 2020, 37% of agents have said buyers are worried that prices will fall after they make a purchase. Now 46% say they observe that concern." Photo / Fiona Goodall
On average 52% have cited access to finance. But now only 23% say that. Banks are willing to lend. Since 2020, 37% of agents have said buyers are worried that prices will fall after they make a purchase. Now 46% say they observe that concern. This is understandable for most parts of the country given the record of falling prices for most areas since the start of this year.
Whereas on average 28% of agents have said buyers are worried about their employment and income, the latest reading is above that at 39%. However, the peak period for this measure was just over a year ago at 55% so we can say that although job sustainability is a concern, people have grown less concerned about it this past 12 months.
The big change comes when we look at the percentage of agents saying that buyers are worried about interest rates. A year ago, only 1% of agents said this was a concern. Now 57% say that.
Given the very high probability that the Reserve Bank will tighten monetary policy in December, this concern is likely to stay elevated and continue to act as an increasing constraint on real estate market strength through all of 2027.
