Investors remain on the sidelines as agents report falling prices and weak auction turnout
New Zealand's residential property market remains firmly tilted in favour of buyers, according to the latest NZHL Property Report by independent economist Tony Alexander (pictured), based on a survey of 287 real estate agents.
A net 43% of agents say the country is in a buyer's market, a position that has held for two and a half years. Alexander notes that market conditions "remain firmly in favour of buyers, as has been the case now for two and a half years."
Agents report prices are still trending down, with a net 41% saying average prices are falling in their region — a trend borne out in Cotality's Home Value Index, which showed national values down 0.3% in July, matching June's fall.
Auction and open home attendance also remain soft, though both have improved slightly from the depths seen earlier this year following the outbreak of Middle East hostilities in late February. A net 25% of agents reported weaker auction attendance this month, an improvement on the net 31% recorded a month earlier.
EMBED: <iframe src="https://www.linkedin.com/embed/feed/update/urn:li:share:7490585591835840512?collapsed=1" height="719" width="504" frameborder="0" allowfullscreen="" title="Embedded post"></iframe>
First-home buyers active, investors still cautious
First-home buyers continue to lead activity, with a net 35% of agents reporting more of this group in the market, up from a net 28% the previous month and the strongest result since before the war-related shock.
Investors, by contrast, remain largely absent. A net 49% of agents report fewer investors looking to buy, only slightly improved from -50% in April.
Alexander describes this as part of a longer-term shift rather than a temporary pullback.
"There has been a structural shift in investor demand for property. This shift does not mean a wholesale withdrawal of investors but the absence of a feeling by the less informed and lowly capitalised that failing to purchase an investment property would be a mistake," he said.
Cotality NZ chief property economist Kelvin Davidson has made a similar observation, noting that mortgaged investors are becoming more wary ahead of the election and possible property tax policy changes, leaving first-home buyers better placed to negotiate than investors weighing their next move.
FOMO fades as concerns persist
Fear of missing out among buyers has dropped to just 4% of respondents, the lowest reading since June 2024, reflecting how firmly market power currently sits with buyers.
"Buyers are aware that market power for the moment lies with them and there seems little reason for expecting this situation to change much until the labour market improves in a strong and obvious manner," Alexander said.
Buyers' main concerns remain rising interest rates, job security, and the risk of prices falling further after purchase. That concern is borne out in the latest data: annual inflation climbed to 4.1% in the June quarter, its highest level in two years, as the Reserve Bank lifted the OCR to 2.5%.
Property appraisal requests have ticked up to a net 10% from just 1% last survey, though this remains well below the net 50% averages seen from September through February, suggesting many vendors are still hesitant to list.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
