Record number of real estate agents say house prices are going down

Related video: Kelvin Davidson said the housing market is a little bit "sluggish".

© Video – AM; Image – Getty Images
Related video: Kelvin Davidson said the housing market is a little bit “sluggish”.

A new real estate survey has revealed a record number of agents are seeing a decline in house prices in their location.

The Real Estate Institute of New Zealand (REINZ) and Tony Alexander Real Estate Survey released on Monday gathers the views of licensed real estate agents across the country on residential property market conditions at the moment. They’re asked how activity levels are changing, what the views of first-home buyers and investors are, and the factors that are affecting the sentiment of those two large groups.

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Out of the 468 respondents, a record net 44 percent of agents said that prices are declining in their location. Just 6 percent reported that prices are rising, 50 percent said they are falling, and 45 percent said they are not changing.

The survey shows that agents feel prices are falling in all locations except Queenstown.

This decline in house prices is in stark contrast to what was seen between August 2020 and February 2021, where over 80 percent of agents regularly reported that prices were rising in their location. This was a “substantial turnaround” from the net 17 percent who in April 2020 at the start of lockdown said that prices were falling.

The survey respondents also revealed that fear of missing out – or FOMO – is no more and just 7 percent said they saw buyers displaying this.

No agents reported seeing any FOMO in Hawke’s Bay, Manawatu-Wanganui, Wellington, and Dunedin. A gross 18 percent in Queenstown, however, reported some FOMO, the survey says.

“Widespread reports of weakening sales, falling prices, and inability to get credit likely account for buyers no longer feeling a visceral need to buy as soon as possible,” the report says.

Additionally, a record 71 percent of agents said they’re seeing fewer first-home buyers in the market.

“This gauge of market strength has been trending downward since November 2020 but with a flattening evident between April and October of last year when first-home buyers took advantage of reduced competition from investors who were backing away following changes to tax rules announced on 23 March,” the survey says.

Buyers’ main concerns are also changing. Up to October last year, a shortage of listings was the main concern, but now, 87 percent of agents say difficulty getting finance is the biggest problem.

The fear of overpaying has also risen again, with 53 percent of agents saying that buyers are worried that prices will fall after they make a purchase.