Auctions busier, first-home buyers drive market momentum
The latest NZHL Property Report by Tony Alexander (pictured), based on a survey of 274 licensed real estate agents across New Zealand, shows signs of seasonal improvement in the housing market.
A net 17% of agents reported more people attending auctions in the past month, up from just 2% in July and from the May low when a net 20% reported fewer attendees. Similarly, open home interest has picked up, with a net 28% of agents seeing more people through doors, compared with just 8% in July.
“The data tell us that we are past the worst point for this particular period in the residential real estate market,” Alexander said. “However, some caution is needed in interpreting the improvement from last month because there is a seasonal effect at work.”
The pick-up comes as BNZ analysis shows the housing market is effectively flatlining, with affordability at its best level in more than four years. BNZ’s index estimates properties are now about 17% more affordable than at their worst point in December 2021, aided by falling mortgage rates, steady prices, and income growth.
Prices still under pressure
Despite the lift in activity, prices remain under downward pressure. A net 13% of agents said prices are falling in their area, an improvement from a net 20% last month and 38% in May.
“The result remains negative and there is a reasonable correlation between this measure and the eventual track for house prices captured in the REINZ’s nationwide House Price Index which has now decreased five months in a row,” Alexander said.
BNZ chief economist Mike Jones said recent REINZ data confirms the market recovery has stalled, with small declines in June and July. BNZ has nudged its annual house price inflation forecast down to just 1% for 2025, suggesting prices could end the year back near 2021 levels.
Buyers show little FOMO
Fear of missing out remains muted in the current market. Only 12% of agents observed FOMO among buyers, largely unchanged from 11% in July and just above the 5% low seen in May.
“For the moment buyers continue to feel that they can take their time, and agents report buyers are often making low-ball offers then walking away to peruse another of the many properties offered for sale if that offer is rejected,” Alexander said.
First-home buyers remain dominant
First-home buyers continue to dominate the market, with a net 55% of agents seeing more in the market. This measure has remained positive almost every month since February 2023, highlighting the sustained demand from young buyers.
“Young buyers have remained active even as the market went through a winter slump driven by other buyers staying away,” Alexander said.
Affordability gains are helping underpin that demand. BNZ notes Auckland and Wellington have recorded the biggest improvements in the past year, though both remain the least affordable regions overall.
Investor activity picks up, but may be seasonal
Investor interest has also lifted, with a net 14% of agents reporting more investors in the market, compared with just 4% in July and May.
“The rise in their interest this month could just be seasonal and might fade away again,” Alexander said. “Having said that, a number of agents have reported that lower interest rates are stirring the interest of investors.”
Bulk purchases of unsold developers’ stock by long-time investors were also noted in media reports.
Offshore interest weak, appraisals rising
Offshore enquiries remain subdued, with a net 12% of agents reporting fewer enquiries. While this is the least negative result since March, volumes remain low.
Alexander noted the government’s recent change allowing some business visa migrants to purchase property above $5m is unlikely to materially shift the market.
Meanwhile, property appraisal requests are increasing strongly. A net 39% of agents reported more requests, compared with 20% in July and just 5% in May — though Alexander acknowledged much of this is likely seasonal as potential vendors prepare for spring listings.
Buyer concerns centred on jobs and finance
Agents said employment and access to finance remain the top two concerns for buyers. Around one-third of agents noted buyers are also worried about prices falling after purchase, although that concern has eased slightly.
“Job security levels in the country are currently poor and likely to remain that way as people read about more restructuring in the public sector and closures of nationwide retail chains,” Alexander said.
Still a buyer’s market
The country remains firmly in buyer’s market territory, with a net 26% of agents saying sellers are more motivated to close deals. That compares with 39% in April and is still far from the strong seller’s market conditions of 2020–21.
“Periods of firm investor demand have not been sustained … the country remains solidly in a buyer’s market,” Alexander said.
Read the full NZHL Property Report here.
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