ANALYSIS: This week, I completed my latest monthly NZHL-sponsored survey of New Zealand real estate agents. The results provide insights into what is happening in the housing sector at the coalface. This is the second such survey I've undertaken since the US invaded Iran on February 28, and the impact of the war on energy markets is apparent.
People are highly worried about their jobs and interest rates, FOMO has almost disappeared again, investors have once again backed off, and we are in the strongest buyer’s market since the 2% recession of 2024.
Only 8% of agents have reported that buyers are fearful of missing out – FOMO. Last month’s reading was 13% and early in December the measure stood at 26%. The net proportion of agents saying that prices are rising in their area has gone from 21% four months ago to -2% a month ago, and now a net 27% say prices are going down again.
First-home buyers remain quite active and have the market to themselves, with a net 34% of agents seeing fewer investors looking to make a purchase. Attendances at auctions and open homes have fallen away strongly over the month, and potential sellers have pulled back from seeking appraisals.
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All up, for the third time since the middle of 2023, an upturn in the residential real estate market has been snuffed out and gone into reverse. Some of the comments made by agents to describe the situation include:
"Open homes the last 2/3 weeks have been terrible." - Wellington
"Since the war in Iran & fuel shortages, it has been very quiet. We are still making some sales but property viewings are at a record low. At least the people who are viewing are serious. People are unsettled and cautious." - Northland
"I had been incredibly busy since November with most listings selling on auction or Tender day. However, it’s frustratingly ground to a halt in the last few weeks since the war started." - Auckland
"A real change over the last three weeks of fewer buyers and potential sellers about. First-home buyers still around, but most others have gone quiet since world events have started to affect NZ." - Canterbury
Independent economist Tony Alexander: "Strongly empowered buyers will walk away at the first sign of vendor intransigence." Photo / Fiona Goodall
As we head through autumn into winter, it looks reasonable to expect prices will be flat to falling while listings remain strong. The message to vendors remains the same as it has been for a number of years. You’re not going to receive the 2021 valuation for your property and if you want to sell, you’ll need to meet the market and recognise that buyers have the strong upper hand.
For buyers, the message is also the same. You face a high number of property listings, and if this is your first home purchase, you are in the best position for such buyers in potentially two decades. New properties continue to hit the market, there is a stock of unsold new townhouses, which developers are increasingly under pressure to offload, and many Mum and Dad investors want to sell and invest in something else.
For real estate agents, the message is that you can no longer just position yourself in the middle of an easy transaction and clip the ticket. You’ll need to focus on convincing vendors that the housing market has no prospect of booming in the next few years and strongly empowered buyers will walk away at the first sign of vendor intransigence.
Agents should reread my article from five weeks back with 16 reasons why investor demand is structurally and not just cyclically falling, and examine the full results of my survey of agents when it gets released in a few days.
- Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz
