NZ property market: Buyer caution as investor activity wanes

Tony Alexander highlights changes in NZ property market

NZ property market: Buyer caution as investor activity wanes

The latest NZHL Property Report, presented by independent economist Tony Alexander (pictured above), consolidated insights from licensed real estate agents across New Zealand.

The NZHL report provides a comprehensive analysis of the current state of the residential property market, focusing on buyer and investor sentiments, auction trends, and the overall market dynamics.

Buyer sentiment: Cautious optimism prevails

The NZHL survey, which gathered 219 responses, highlights that first-home buyers remain actively engaged in the property market. However, investors seem to be retreating, continuing a trend of minimal participation.

“For the first time since September more agents feel that prices are falling rather than rising in their area of operations,” Alexander said.

Furthermore, only 11% of agents report that buyers are experiencing fear of missing out (FOMO), indicating a market that favors buyers.

Auction and open home attendance trends

A decrease in auction attendance has been observed, with a net 10% of agents reporting more people attending, the lowest since July and a drop from 27% in November.

Conversely, open home attendance is on the rise, with a net 45% of agents noting increased attendance, up from 28% two months ago.

This suggests that while potential buyers are viewing properties, they are not rushing to place bids at auctions.

Prices and investor activity

The report revealed a net negative sentiment of 5% among agents regarding price increases, a sharp contrast to the -55% observed in May. The overall price movement in recent months appears to be flat.

Investor participation is notably low, with only a net 12% of agents observing an increase in investor activity, down from 36% two months ago.

High operational costs, stringent tax regulations, and a lack of upward price momentum are deterring investors, the NZHL report found.

Offshore interest and property appraisals

Enquiries from offshore continue to decline, with more agents reporting a decrease.

Property appraisal requests, however, are on the rise with a net 65% of agents receiving more enquiries, indicating a high interest in market entry or property valuation.

Top concerns among buyers

The primary concerns for buyers revolve around securing financing and employment stability.

Access to finance has been a persistent worry, heightened by regulatory tightening at the end of 2021, though concerns have eased slightly since.

Employment concerns remain elevated, reflecting economic uncertainty, while worries about interest rates have diminished following policy shifts mid-2024, according to the NZHL report.

Access the NZHL Property Report in full here.