ANALYSIS: Earlier this week I released the results of my latest monthly survey of real estate agents, conducted with NZHL, and in most respects they look very similar to last month's.
There are still minimal feelings of FOMO (fear of missing out), with just 8% of agents saying buyers are displaying it compared with 6% a month ago. Investors remain in very short supply, with a net 46% of agents seeing fewer such people looking to make a purchase (last month it was 49%).
First-home buyers continue to be the active group, with a net 45% of agents (up from 32% a month ago) seeing more young people in the market. This – along with flat prices on average – has been the defining characteristic of our real estate market since early 2023. Chances are things will remain this way through the entirety of this cycle.
Prices are still declining, according to a net 40% of agents, but a North-South divide remains: a net 10% of agents in the South Island note falling prices, while a net 47% in the North Island see the same in their patch.
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It is worth noting that in both islands, a net 10% of agents say fewer people are showing up at open homes. So buyers are not rushing to purchase whatever they can down south. Their FOMO reading is still low at just 7%.
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As part of my surveys, I ask agents what buyers are worried about. In the latest readings, 45% say buyers are concerned prices will fall after they make a purchase. We call this FOOP – fear of overpaying. This is a statistic not to be ignored because in Australia, where most people believe house prices are falling around 10%, that fear has led to a refusal by some parents to help their children to buy a house.
Presumably this situation will change once there is a generalised view that prices have bottomed out. But until then sales will decline as they have already been doing for a few months. Over in New Zealand, it would be surprising if we didn't see a similar though less strong development – in some North Island markets at least, not so much down south.
Buyers are also worried about their employment, according to 38% of agents. This is also an important measure because if people feel worried about their income, then they are going to be very hesitant to commit to purchasing a new home. The positive news is that this measure has been improving in fits and starts since hitting 53% in our late-March survey.
Independent economist Tony Alexander: "Buyers are not rushing the barricades to purchase whatever they can down south." Photo / Fiona Goodall
Only 27% of agents said that buyers are worried about getting the finance they need. This is little changed from the record low of just 23% recorded a month ago.
All up, this survey of the real estate coalface tells us that the housing market around the country has started spring in continuing soft form, with no solid signs of recovery resuming as yet. Given how mortgage rates have risen, and the risk they rise much more than people are currently thinking through 2027-28, it would not be surprising if the survey results remain quiescent for a long time.
- Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz
