But worst of rate shock over, says economist
A survey of real estate agents throughout the country shows property buyers are continuing to sit on their hands amid rising interest rates and recession fears.
But economist Tony Alexander, who conducts the survey along with REINZ, said buyer sentiment had improved since November, when the RBNZ announced a 75-basis point rise to the official cash rate.
A February REINZ and Tony Alexander Real Estate Survey, released on Wednesday, captured responses from 612 real estate agents throughout the country. A net 59% of real estate agents reported that prices were falling in their location, similar to a net 74% in December.
Feedback on the number of buyers attending auctions was little changed from two months’ ago, with a net 33% of real estate agent respondents reporting fewer bidders.
Although first home buyers had not returned to the property market, results from the February survey showed the degree to which they were stepping back had eased. A net 3% of real estate agents reported seeing fewer young buyers, compared to a net 16% in December.
Independent economist Tony Alexander (pictured above) told NZ Adviser that consistent with a recent spending survey, results from the February real estate survey showed homebuyers remained cautious.
“Buyers are still on strike … but we are past the worst of the monetary policy shock of November 2023,” Alexander said.
Demand for property appraisals increased, with a net 31% of real estate agents seeing more requests from vendors, up from a lower 8% in late November, although Alexander noted that the level of appraisals was consistent with other readings over the past three years.
Among residential property buyers, the top three concerns reported by real estate agents were higher interest rates, access to finance and that prices would drop after they purchase.
Despite rising interest rates, survey results indicated investors were not looking to offload their properties, with no real estate agents reporting seeing more investors wanting to sell.
The 0.75% rise in the official cash rate to 4.25% marked the ninth rise in 13 months. Bank economists have recently revised their forecasts downward, Westpac among those forecasting a more subdued 50-basis point increase when the Reserve Bank of New Zealand meets on February 22.
Concerns around finance approval eased slightly, although Alexander noted that access was still perceived to be a lot more difficult than prior to the tightening of LVR rules from November 2021, followed by the introduction of changes to the CCCFA.
Minister of Commerce and Consumer Affairs David Clark has since announced further changes to CCCFA regulations, undertaking to narrow expenses considered by lenders, assumptions around buy now pay later and credit card schemes, and to help make debt servicing and refinancing more accessible to borrowers.
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