FOMO returns as first-home buyers drive NZ housing market

New Zealand’s housing market is firming slightly, with more agents reporting price rises and buyer sentiment shifting from fear of over‑paying (FOOP) toward fear of missing out (FOMO) – yet agents still see a clear buyer’s market overall.

The latest NZHL Property Report by Tony Alexander (pictured), based on responses from 184 licensed real estate agents nationwide, highlights continued strength from first-home buyers, ongoing investor caution, and easing concerns about access to finance. 

That picture of a firmer but still buyer‑leaning market is echoed in Cotality NZ’s latest figures, which show national property values were flat in November, leaving the median at $806,551 – still about 17% below the early 2022 peak. 

Price sentiment turns positive, but still well below previous peaks

After a soft patch earlier in the year, more agents now say prices are rising in their area than falling – for the second month in a row.

For seven consecutive months earlier this year, more agents reported falling prices than rising. That has now reversed:

• Last month, a net 7% of agents said prices were rising.
• This month, that figure has jumped to a net 21% reporting gains.

Alexander notes that “this is the strongest result since January 2024 but remains below the net 38% of late-October 2023 and of course the peak of 92% seen in January 2021.”

FOMO finally exceeds FOOP again

The survey shows a notable shift in buyer psychology: FOMO has overtaken FOOP for the first time since early 2024.

For most of the time since the end of 2021 – when the government and Reserve Bank imposed a credit crunch – buyer FOMO has been “muted”, with short‑lived bursts in 2023 and late‑2024 that faded quickly.

Alexander suggests this phase could be different. He notes that “the outlook for the economy is substantially better than during the previous two periods of FOMO recovery and this time around interest rates look solidly like remaining low for quite some time.”

“Of interest this month is the switching around of FOMO and FOOP – fear of over-paying. For the first time since January 2024 FOMO exceeds FOOP,” he said. 

Activity lifts at auctions and open homes

Agents continue to report more people in the market, although momentum has eased from last month’s post‑rate‑cut surge:

• Auctions: A net 23% of agents say they are seeing more people showing up at auctions (down from 31% last month, but still the second‑strongest result in a year). Comments suggest clearance rates are “generally rising but not in any particularly rapid manner.”
• Open homes: A net 24% of agents report more people attending open homes, down from 43% last month.

Alexander notes that last month’s strong open‑home result “may have been driven upward by people reacting to the 0.5% cut in the official cash rate undertaken early in October.” The more recent 0.25% cut “was as expected”, and signals from the Reserve Bank that further cuts are unlikely “may have caused some people to take some time to consider the implications.”

First-home buyers still dominate demand

First home buyers remain the engine of the market:

• A net 56% of agents say they are seeing more first‑time buyers in the market – essentially unchanged from the very high readings of 55%, 53%, and 58% over the previous three months.

Alexander notes that young buyers “have been active in the housing market since early in 2023, taking advantage of lower prices, strong listings, built up savings, and lack of many other buyers – investors in particular.”

Investors remain cautious and more focused on selling

In stark contrast, investor demand remains subdued:

• Only a net 2% of agents this month say they are seeing more investors – down from 11% last month and the weakest result since June.

Alexander says it is possible that “the Labour Party’s plan to impose a capital gains tax on investors if elected has scared some away – not least because of the heightened risk of other policies being changed as well such as interest deductibility.”

On the selling side, he notes that investor desires to sell “rose firmly late in 2023, triggered perhaps by the entry of many first-home buyers into the market amidst underlying concerns about the shift in the long-term tax and rules environment against rental property owners.”

Among investors still considering purchases, “the main factor which investors cite as motivating a desire to buy is the hope of finding a bargain,” Alexander said. 

However, he cautions that “hopes of finding a bargain may be diminishing however now that the market is edging back upward. More investors are noting anticipation of price rises as motivating a purchase and low interest rates are providing some additional motivation to buy also.” 

No meaningful change is evident in those buying purely for retirement purposes.

Offshore interest muted; appraisal activity points to healthy listings

Despite talk of allowing foreign buyers into homes priced over $5m, agents are not yet seeing a material impact from offshore demand:

• A net 8% of agents report fewer enquiries from offshore buyers, little changed from 7% last month.

Alexander writes that “there is little evidence to suggest that the plan to allow foreign buying of homes priced over $5 million is having much impact on the extent of enquiry from offshore in NZ homes.”

On the supply side:

• For the third month in a row, a net 53% of agents say they are receiving more property appraisal requests.

This suggests “the quantity of listings to come forward over coming months will be relatively healthy,” although Alexander notes there is a “clear seasonal element” in the recent lift.

Buyer concerns: finance fears fade, job worries linger

The NZHL report also tracks what buyers are most worried about:

• The top two concerns remain employment and getting finance.
• However, concerns about accessing finance are trending down sharply. The share of agents citing this as a buyer concern has fallen to 30% – the lowest on record, from almost 90% in late‑2021 when the credit crunch struck.
• Concerns about prices falling after purchase have “fallen away quite noticeably in the past half a year,” consistent with FOOP receding.

Alexander observes that “virtually no-one is worried about interest rates.” But he highlights that “feelings of job insecurity remain high,” which matters for household spending and for how quickly more owner‑occupiers might re‑enter the market with confidence.

Still a clear buyer’s market – for now

Despite firmer prices, more active buyers and rising FOMO, agents overwhelmingly still see conditions favouring buyers:

• A net 27% of agents say the market is a buyer’s market.
• This gauge has signalled buyer’s‑market conditions since the start of 2024.

Alexander notes that “despite prices now rising after easing mid-year as the economy shrank there is no clear diminution of the power of buyers over vendors as yet.”

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