Buyers are out in droves, but vendors are still holding back from the housing market, according to the monthly survey of real estate agents by REINZ and economist and OneRoof columnist Tony Alexander.
Alexander says that his view of a buoyant market continuing is at odds with many other economists predicting 10 to 15 per cent price drops, but is based on evidence from surveys
“at the coal face.”
“I’m surveying real estate agents, mortgage brokers and valuers. They’re reporting that there is strength in buyers, but vendors are under no pressure to sell.”
Start your property search
And he predicts that July and August markets will continue to be “firm, I wouldn’t say ‘hot’”.
Alexander says that the shortage of listings has become a “self-perpetuating dynamic.”
“Vendors say ‘I know it’s going to be hard to buy’ so they hold off listing until they’ve bought. So they become buyers before they become sellers. There is such a queue of frustrated buyers.”
Alexander says that there are fewer investors in the market and expects hopes of the predicted price-dropping bargains will be fading, while first home buyers hoping for a listing are still frustrated.
He says that there will be even more people coming back into the market through July and August, the typically quiet months for property.
“As each week goes by, they will have more of a doubt of those [predicted] 10 per cent price drops, they’ll give up expecting they will fall strongly, and so more people will be coming back into the market.”
REINZ chief executive Bindi Norwell concurs: “The report has shown some good improvements in the general activity and confidence of the residential property market. This is welcome news given some of the initial predictions of how the property market would respond to Covid-19.
“We don’t appear to be seeing any slowdown in first home buyer activity. This perceived increase in activity shows that whilst purchasers aren’t rushing, first home buyers are still taking advantage of the current low interest rates and LVR opportunities available to them.”
Strong on every front
The survey of 647 agents from around the country shows that, apart from a reduction in offshore enquiry, every other measure this month is stronger than in June.
A net 52 per cent of agents are seeing buyers as more motivated to get a deal over the line than vendors. Fewer investors are looking to sell, more first home buyers are in the market, and a net 34 per cent of agents feel that prices are rising compared with a net 18 per cent in June, Alexander reports.
He adds that consistent with results of his other surveys with mortgage brokers and others, difficulties securing bank finance have jumped.
“The trends are consistent with the generally positive anecdotes swirling around the residential real estate market such as high numbers attending open homes, and good prices being achieved.”
Norwell, too says that REINZ is hearing that finance is still a concern or barrier for a lot of buyers.
Vendors not under pressure
Importantly, Alexander notes that as yet the market is not hearing stories of substantial price falls driven by pressed vendors having to meet a reluctant market. With interest rates at an affordable 3 per cent, he says few sellers are under pressure to sell so are not radically altering prices to achieve a sale.
Only in Central Otago Lakes, which includes Queenstown, do agents feel prices are weakening. In other parts of the country such as Taranaki, Manawatu-Wanganui and Hawke’s Bay most of the agents report rising prices.
“As expected, we’ve seen different rates of recovery throughout the regions, particularly when we look at the various indicators and we would expect these variations to continue over the coming months. For example, a net 47 per cent of respondents from Central Otago Lakes have seen more appraisal requests over the last month, compared to a net 11 per cent of respondents from Auckland,” says REINZ’s Norwell.
