Market snapshot: Price downturn bottoms out
The housing downturn may have bottomed out, but economists warn that high mortgage rates and stretched affordability will likely stymie a return to growth.
The housing downturn is losing its puff.
In fact, more than a few industry metrics suggest we’re scraping the market bottom.
Economist Tony Alexander’s survey of real estate agents shows the proportion of agents who say that buyers are displaying FOMO (fear of missing out) has risen to its highest level since November 2021 at 33% – from 19% last month and 9% two months ago.
There has also been a corresponding drop in the proportion of agents saying that buyers are worried about prices falling after a purchase – FOOP. This figure has fallen to its lowest level since October 2021 at 28% – from 39% last month, 49% two months ago, and 68% three months back. The dearth of listings will colour these sentiments.
The number of properties listed for sale in Auckland peaked in August last year. Latest data from realestate.co.nz shows listings have since fallen by 13%.
Further signs of stabilisation
CoreLogic NZ Chief Property Economist Kelvin Davidson said there were signs in key regions of prices stabilising or in some cases even growing. Values in five of the seven main sub-markets in Auckland were either flat or higher in July.
Real Estate Institute (REINZ) figures show similar stability, with the median house sale price across New Zealand remaining unchanged at $780,000 for three months in a row.
ASB economists described the data as the “first meaningful lift” since November 2021. “Prices are still close to 16% below their peak in late 2021, but the data over the past three or four months has been consistent with our expectations that the market is closing in on a turning point,” the bank said.
HSBC tips increase in house prices
HSBC has reduced its expectations of house price falls through the rest of this year, going further to suggest that prices will increase at an annual rate of 5% by the end of 2024.
HSBC economist Jamie Culling said New Zealand’s housing market had seemed particularly stretched compared to other countries in the early stages of the pandemic.
“Off an already high base, housing prices rose by over 45% between end-2019 and their peak in late 2021, reflecting the large monetary and fiscal stimulus delivered,” he said.
But higher interest rates had caused house prices to fall sharply.
Culling noted that in Australia, despite interest rate rises, population growth had led to prices recovering more strongly than expected.
“We expect a similar trend to emerge in New Zealand, and some indicators of housing market conditions have shown a stabilisation in recent months. Recently, housing prices have risen marginally on some indices,” he said.
10 Auckland suburbs to watch
Research by development experts at real estate agency Colliers found several locations around the city that are primed to rebound quickly and strongly from the current housing market slump. Here are their picks.
The market is changing. If you’re ready to buy, the time to act is now. Call 0800 GOODWINS for a chat or view our latest listings here.