Real Estate Trends and Market Shifts September 2024

Tony Alexander, an independent economic commentator, has shared insights from his latest survey of real estate agents across New Zealand. The survey results indicate a noticeable strengthening in the residential real estate market, even prior to the easing of monetary policy on August 14.

In comparison to two months ago, when a net 35% of agents reported fewer attendees at open homes, the current data reveals a shift with a net 42% now observing more visitors. This marks a significant increase from the late-July result of 11%, suggesting a growing interest in the housing market. However, whether this heightened interest translates into actual purchases remains to be seen.

Although August sales data from REINZ is not yet available, the survey shows a net 12% of agents witnessing an increase in auction attendance, compared to a net 11% reporting fewer attendees last month and 37% two months ago.

Despite the rising attendance at open homes and auctions, prices have not yet begun to climb. Currently, a net 7% of agents report falling prices in their regions, a slight improvement from the net 29% reporting declines last month and the substantial 50% two months ago.

This stagnation in price increases is not due to a lack of investor activity. In fact, a net 25% of agents have noted an increase in investor interest, reversing the net 24% decrease observed two months ago.

The reason for the absence of rising prices seems to be an increase in supply. A net 50% of agents have reported receiving more requests for property appraisals, a significant rise from just 3% two months ago and the strongest figure since February’s net 61%. This uptick suggests that more people are looking to sell, encouraged by discussions about falling interest rates impacting the housing market.

Additionally, a net 20% of agents report seeing more investors looking to sell, which can be attributed to rising costs associated with running rental properties, such as increased council rates and insurance premiums.

Despite the increased buyer interest, 48% of agents indicate that buyers are still concerned about their employment stability. This figure, which is substantially higher than the 14% reported at the beginning of the year and not far from the recent peak of 56% seen at the end of June, highlights ongoing worries about job security.

Moreover, over 50% of agents report difficulties in securing finance, while only 24% express concerns about falling prices, down from 44% two months ago. This shift suggests that buyers anticipate price adjustments as the market gains momentum.

The lack of immediate price increases has led to a rise in the proportion of agents noting a fear of missing out (FOMO) among buyers, which has climbed to 15% from 1% two months ago. Overall, a net 29% of agents still describe the market as a buyer’s market, indicating that buyers currently hold a stronger negotiating position compared to sellers.

Alexander anticipates that this situation will change, with a higher likelihood of a sustained shift towards a seller’s market over the next 2-3 years, contrasting with the brief seller’s market experienced late last year.

Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz