ANALYSIS: Last week I noted my expectation that house prices would rise this year and next but that the presence of investors might be on the muted side. To help understand why I think that it is useful to look at the latest results of my survey of existing property investors, run with Crockers Property Management.
Among the many questions I ask investors is this: Are you thinking about buying or selling a property in the next 12 months? I can compare the percentage saying yes or no and generate a rough net measure of buying intentions.
This month that number stood at -14%. That is, 21% of existing investors said they are thinking about buying and 35% said they are thinking about selling. This number has been negative for a long time, and this is where things get interesting.
In March 2023, the last time the reading was positive, 21% of respondents said they were thinking about buying a property. But only 20% said they were thinking about selling. Hence a net 1% result.
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Over the past two years, more investors have expressed a desire to sell. This is something we saw happening in 2023 once the market gained some upward momentum on the back of first-home buyers jumping in. A few investors followed them to buy but their numbers got swamped by investors, and others, looking to take advantage of the uptick in prices.
Note that two times above I used the word “existing” to describe the investors I survey. My analysis does not capture new investors. Other analysts indicate that they can see some more investors appearing and my survey of real estate agents shows a net 12% are seeing more investors looking to buy.
But the high proportion of investors looking to sell suggests that there will be more listings hitting the market in the coming months. This will help to keep prices in check for the first half of this year. After that things will get more interesting.
Independent economist Tony Alexander: "Over the past two years, more investors have expressed a desire to sell." Photo / Fiona Goodall
By mid-year, we may have a feel for where annual net migration flows will bottom out. We will hopefully have a better feel for where world growth and tariff-driven inflation are headed, and we should also have about reached the bottom of New Zealand’s easing phase of the monetary policy cycle.
We are likely to see signs of the labour market improving as economic growth gains some mild momentum and that may encourage owner-occupiers to think more seriously about selling and buying or vice versa. Speaking of which, one notable feature of the retirement industry at the moment is lack of expected inflows of people into retirement villages because they don’t feel they can sell their existing houses for an acceptable price.
We are in a buyer’s market, and although I expect some strength mid-year it is hard to imagine the housing market gaining sufficient momentum before the end of this year to encourage older folk to think that they have the upper hand. For retirement village operators reliant on unit sales, the remainder of 2025 will probably be tough.
- Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz
