New Zealand's property market is improving, but is not yet overheated, as an early year surge of activity appears to be fading, BNZ chief economist Tony Alexander says.
However, agents were reporting that more investors, as well as first-home buyers, were appearing in the market. This, coupled with evidence there would not be a flood of properties hitting the market anytime soon, could mean the current pressures - the national median sale price hit a new record high of NZ$370,000 in March, while sales were at their highest point since 2007 - may remain.
Buyers were strongly motivated in all parts of Auckland and Christchurch, according to Alexander's latest BNZ-REINZ Residential Market Survey. This fits with the latest figures from the Real Estate Institute of New Zealand (REINZ), which showed record prices in those two cities in March, which have been feeding into rising rents.
Getting warmer, but not over-heating
"Our April survey of over 10,000 licensed real estate agents around New Zealand has found that in general conditions are perceived as strong in the marketplace,'' Alexander said in the latest survey.
"Practically all other measures have also eased back slightly over the month and we read this as consistent with a residential real estate market which is improving but not becoming over-heated. In fact a net 4% of agents still perceive that it is more a buyers' rather than a sellers' market. Having said that, a net 25% perceive prices to be rising," Alexander said.
The early year surge of activity appeared to be fading, with a net 17% of respondents perceiving more people were going through open homes. This was down from a net 38% in March and suggestive of a market which was not attracting panicked buyers, Alexander said.
Sales success rate remains high
A net 35% of agents noted that more written sales were going unconditional in March. "We simply read this as saying few buyers are backing out of agreements," Alexander said.
A net 12% of agents felt that auction clearance rates were rising. This result, however, was down from a net 23% last month and, "as noted in the introduction suggests to us that although the market is improving it is not running away," Alexander said.
No flood of properties coming
"A net 15% of agents report that they are receiving more requests for property appraisals from potential sellers. If our survey captures not the change in appraisals from month to month but some comparison with average, then given that the average for the full 12 months we have run the survey is 17% this outcome suggests no flood of properties as likely to hit the market anytime soon," Alexander said.
A net 15% of agents reported more investors appearing in the market.
"This makes for three strong months and backs up reports in our separate BNZ Confidence Survey showing strong conditions in the residential property management sector," he said.
Meanwhile a net 35% of agents reported they were noticing more first home buyers in the market.
"This strong result is consistent with anecdotal reports of first home buyers seeking property."
Prices seen as rising
A net 25% of respondents felt prices are rising, making for three months of strong results, Alexander said.
"With just a net 4% of agents feeling that sellers are more motivated than buyers one can say that realistically it is neither a buyers' nor a sellers' market," he said.
The poor quality or outright availability of listings was becoming a more important factor in causing buyers to hold back from making a purchase. This accorded with anecdotal evidence, Alexander said.
Finally, buyers were viewed as strongly more motivated than sellers in all parts of Auckland and Christchurch, while sellers still remained far more motivated in Wellington and Northland. Prices were not perceived to be rising everywhere with weakness viewed in Waikato and Northland, and generally flat price change perceptions were evident in Hawkes Bay, Tauranga, Hamilton City, Otago and Manawatu-Wanganui.