ANALYSIS: Each month I run five surveys covering real estate agents, mortgage brokers, businesses, consumers, and residential property investors. From the survey of real estate agents with REINZ I produce the only national and regional measures of FOMO (fear of missing out) and FOOP (fear of over-paying).
My most recent survey of real estate agents, conducted three weeks ago, showed a rise in the percentage of agents nationwide seeing FOMO in the market to 19%, from between 4% and 9% for every other month since February 2022. The results are still well below the 52%-70% who from mid-2020 to late-2021 were seeing FOMO, with a peak of 92%. The percentage of agents in Auckland seeing FOMO, however, sits at 27%, which suggests our largest city may lead house prices upward this cycle.
In contrast, FOOP is being observed by just 39% of agents nationwide, which is the lowest reading since November 2021 and below the 73% peak recorded in May 2022. This measure ranged from 16% to 37% between mid-2020 and late-2021. Auckland sits at 37%, Queenstown only 22%.
From my survey of mortgage brokers undertaken alongside mortgages.co.nz and conducted just last week we can see that first home buyers remain the driving force in the turning of the housing cycle. A net 40% of advisers say they are seeing more first home buyers in the market looking to get finance compared with 13% seeing fewer young buyers as recently as January.
Start your property search
In contrast, a net 13% of advisers say they are still seeing fewer investors. Feedback supplied by both real estate agents and mortgage advisers is that while some investors have been buying (often with no debt, according to CoreLogic data), the bulk are sitting on their hands waiting for the election outcome. If National wins, as the polls suggest, and deductibility of interest expense returns, we can expect many investors to look at making a fresh purchase to expand the rental stock.
Read more:
- Desperate homeowners turning to third-tier lenders to stave off mortgagee sales
- Buyer snaps up South Auckland do-up for $764,000, plans to flip it in six weeks
- $60m Waiheke estate comes back to life as Hollywood comes knocking
At the moment there are many new townhouses being bought and placed with property management agencies so it would not be accurate to say that the stock of rental property is falling. But we can already see the impact of the boom in net migration on the labour market, with businesses in my monthly Business Survey, undertaken with Mint Design, saying they are finding staff easier to source.
On this basis it seems reasonable to expect that the acceleration in population growth will see rental demand growth outpacing new supply growth with clear upward pressure on rents once more. The transfer of extra net demand to rents may be greater than what has happened in the past given the Government’s many moves against landlords, which have boosted their costs and which they will soon be in a position to recover as leases come up for renewal.
Independent economist Tony Alexander: “My most recent survey of real estate agents showed a rise in the percentage of agents nationwide seeing FOMO.” Photo / Fiona Goodall
From my monthly Spending Plans Survey of consumers we can tell that owner-occupiers are still not stepping forward to either buy then sell their house, or sell then buy a replacement. The survey captures very few people aged below 30 and with the average age of first home purchase being 34 my survey mainly reflects opinions of those who already own a home.
A gross 9% of survey respondents said they are looking over the next 3-6 months to purchase a dwelling to live in. This is below the three year average of 11% and the past six months have not produced the same step up in demand as has been recorded for first home buyers in my real estate agent and mortgage broker surveys.
These are early days for the turning of the housing cycle. But keep an eye on what happens once these factors come into play – mainly next year but with some impact well before the end of this year as well. Falling interest rates, falling stocks of listings, falling new house construction, easing bank lending rules, rising rents, booming net immigration, and rising foreign student numbers. Especially in Auckland.
- Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz
Ad Tag
