Housing market slows despite interest rate relief
Falling mortgage rates are no longer stimulating buyer activity, with the latest NZHL Property Report showing fewer open home visits, softening prices, and rising employment concerns dampening the market.
This is despite rising optimism in ASB’s latest Housing Confidence Survey, which found a net 28% of New Zealanders believe it’s a good time to buy – the highest reading since 2011 and national sales volumes lifting to more than 83,000 in the past 12 months – up from a trough of less than 63,000 in mid-2023, according to Cotality NZ.
Buyer turnout slumps
A net 20% of agents said fewer people were attending auctions, the weakest result since June 2023. A similar decline was seen at open homes, where a net 16% of agents reported reduced foot traffic.
“These are deep concerns held by buyers which overwhelm the positive impact of falling interest rates,” said Tony Alexander (pictured), independent economist.
Alexander observed that employment concerns have now risen for two consecutive months, reaching 51% – close to the 56% peak of June 2023.
Prices retreat, FOMO fades
A net 38% of agents reported falling house prices in their area. Just 5% observed fear of missing out (FOMO) among buyers – down from 19% in October.
“Buyers feel almost no anxiety about missing out on a purchase if they delay,” Alexander said.
FOOP (fear of overpaying) is also rising, reflecting fragile confidence in near-term capital gains.
First-home buyers hold ground, investors retreat
A net 29% of agents saw more first-home buyers – steady from last month – while investor activity continued to ease, with a net 4% of agents reporting fewer investor enquiries.
Key deterrents for investors included council rates, rising insurance and maintenance costs, difficulty finding reliable tenants, and diminished expectations for capital gains. Only 11% of agents cited capital gain hopes as a current motivator – down from 28% in October, the NZHL study found.
Investors listing to sell, offshore interest dips
More investors are now exiting the market, with a net 24% of agents seeing increased listings by landlords. This marks a continuation of the selling trend that began in late 2023.
Offshore interest also dropped, with a net 30% of agents receiving fewer overseas enquiries. This is not far from the net -37% reported in May 2023, NZHL reported.
