Recent data from CoreLogic suggests New Zealand’s property market upturn is strengthening, with the growing number of buyers returning to the market expected to place upward pressure on property prices in the coming months. As younger first home buyers take advantage of lower house prices, higher saved up deposits, good job security and wages, and the recent easing of lending conditions, this trend is likely to continue.
Buyers returning to market
CoreLogic NZ’s Monthly Housing Chart Pack, which is measured across agent deals and private sales activity, shows a second consecutive month of improved activity, a strong indicator that property sales volumes have reached their lowest point before beginning to rise.
CoreLogic NZ Chief Property Economist Kelvin Davidson said, “It’s important to note that this increase has started from a low base, but as pent-up demand starts to emerge it’s likely we’ll see more increases in sales activity in the remainder of 2023.”
The increase in sales volumes reflects the ongoing strength of the job market, higher net migration, the recent easing of credit rules, and a tentative improvement in house buyer confidence.
New listings remain sluggish, well-below the previous 5-year average, and the upturn in sales figures is placing some upward pressure on house prices in areas such as Auckland, Bay of Plenty and Wellington, as competition returns to the market.
“The flow of new listings coming onto the market each week has remained sluggish month-to-month, as would-be vendors choose to ‘wait and see’, given the uncertainty about how long a sale might take and/or the potential price achieved,” Davidson said.
“Arguably it remains a ‘buyer’s market’, with the national total stock of listings on the market still relatively high. However, there is also a downwards trend now evident for stock levels too, which may start to contribute to competitive price pressures.”
“The end of the downturn doesn’t necessarily mean the market is destined for a sharp rebound,” said Davidson.
“Housing affordability is still stretched, and caps on debt-to-income ratios loom large in 2024. The second half of the year still looks likely to hold some kind of housing market upturn – which will be good or bad, depending on your perspective.”
More FOMO, less FOOP
Economist Tony Alexander’s Real Estate survey for August 2023 aligns with the trends reflected in CoreLogic’s analysis, as real estate agents report higher attendance at open homes and more people at auctions with more buyers taking advantage of house prices bottoming out.
The survey results also show more real estate agents are seeing FOMO (fear of missing out) return to buyers, while FOOP (fear of overpaying) is no longer a major consideration. Alexander said, “No way can one claim that the market is once again in a frenzied state, but the direction of change for this measure as for all others in this survey is clear.”
While investor interest appears to be unchanged, the return of first home buyers has been reported by close to two thirds of real estate agents surveyed, with the driving force behind this upturn linked to lower house prices, higher saved up deposits, better job security, and the recent easing in lending conditions.
Preparing to buy
As always, when it comes to buying or selling property, it pays to be prepared. Whether you’re a first home buyer, existing homeowner or an investor, get mortgage advice around buying a first home, refinancing a mortgage, or buying a holiday home or investment property. Contact a Mortgage Express branded mortgage adviser today.
