Lockdowns don’t stop market rumbling on
Enthusiasm for buying houses has not been dampened by lockdowns.
Friday, September 3rd 2021, 10:14AM
Real estate agents across the country say there is minimal impact on sentiment beyond an obvious reduction in attendance at open homes and to a lesser degree auctions.
In the most recent REINZ and Tony Alexander real estate market survey agents say while the stepping back by investors in the buying market is continuing, fewer are selling.
A net 41% of agents have seen fewer investors in the market in August, a slight drop on July.
“The degree of investor withdrawal has eased since May, but only slightly, and their continuing stepping back stands in stark contrast to what first home buyers are doing,” says Alexander, an independent economist.
The most cited driver of investor demand remains interest rate levels.
About 20-30% of agents say finding a bargain is investors’ motivation for buying.
This measure has barely budged from recent months and sits much lower than early in last year’s nationwide lockdown when a gross 60% and then 55% of agents said hopes of getting a bargain were strong.
Alexander says the Government’s tax changes and extension of the bright-line test plus the lockdown have not produced any statistical evidence of a wave of investors selling.
A net 6% of agents report they are seeing fewer investors selling – not more.
Biggest fears
The biggest factor concerning residential property buyers continues to be a shortage of property listings.
Data from realestate.co.nz show seasonally adjusted nationwide new listings have been dropping for most of this year, and the stock of listings is almost 30% lower than just before last year’s nationwide lockdown.
There is no trend change in concerns about access to finance, and the slight rise in concerns about prices falling is minor.
Alexander says the area of buyer concern showing a definite trend change is worries about interest rates increasing.
A gross 42% of agents have cited this as a major concern they are observing, up from 36% last month and just 13% the first time we asked this question in late May.
Prices rising
A net 59% of agents feel prices are rising. This is essentially unchanged from 61% in July.
The real estate market has entered this lockdown with upward momentum in monthly price gauges just as was the case for the first nationwide lockdown last year.
On average between 2011 and 2014 when this same question was asked in a previous survey, a net 31% of agents said prices are rising. The nationwide pace of price increase over that period averaged just over 5% a year.
Fomo (fear of missing out) in play
The return of Covid in the community and reimposition of lockdown has not prevented fomo from continuing the rising trend it has been on since late May.
A gross 71% of agents have reported that they are observing nervousness from buyers regarding missing out and this is well up from the low of 49% in April.
“That low point came in the second survey after the tax changes announced on March 23 and illustrates there can be a delay between something substantial happening and the fomo gauge strongly altering,” says Alexander.
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