Written by Loan Market
It’s good news for many buyers who’ve watched their target properties disappear beyond financial reach in one of the biggest property booms New Zealand has experienced.
The fear of missing out (FOMO) is being quietly replaced by FOOP – the fear of over-paying.
That’s according to economist Tony Alexander, who’s penned a fascinating column for the website OneRoof based on his observations of five separate real estate surveys he conducts.
The pendulum is beginning to swing back to the buyer as market values flatten or edge backwards after 20%-plus growth in the past two years.
Only 6% of agents are now telling Mr Alexander that they’re still witnessing the phenomenon of FOMO, down from 70% last October.
In his survey for the Real Estate Institute of New Zealand, he found 65% of agents were now reporting buyers with FOOP.
“People can see that prices are falling and have some concerns that if they wait, they could get a better price,” said Mr Alexander, a former chief economist for BNZ.
“They probably will, but they might not get as good a property as the one they just passed up for want of paying 5% less.”
Agents also report that buyers do not appear concerned by the interest rate, which has been increased four times by the Reserve Bank of New Zealand (RBNZ).
Buyers are also expressing confidence in their job security and appear unfazed by any possibility of a drop in income. Two years ago, nearly half of the agents surveyed (48%) said this was a major issue for buyers.
This change in attitude is a likely reflection of the fact that labour shortages are partly responsible for driving New Zealand’s accelerating inflation rate, which currently stands at 6.9%
More good news can be found in Mr Alexander’s survey for mortgages.co.nz.
Credit is starting to flow again. In March, 12% of brokers thought the market was getting tighter, a significant improvement from January (83%) and February (61%). Now, the negative mood has turned with a net-positive 8% saying it’s becoming easier to obtain a home loan.
Investors are also staying in the market, a bellwether behaviour for sustainable property values.
Mr Alexander has found that 39% of investors are “motivated by hopes of getting a bargain”.
His survey with REINZ found only 5% of agents are seeing investors wanting to cash out.
A separate survey for Crockers Property Management said only 1 in 5 investors are contemplating a property sale in the next 12 months.
Mr Alexander said: “The nationwide and Auckland housing markets are in a corrective phase, which will probably peter out before mid-2023. My surveys suggest that the coming flat period may even start before the end of this year.”
The home lending landscape has become far more complex in recent times. And navigating a path through this constantly changing environment can be both exhausting and challenging.More