The latest Tony Alexander and REINZ survey of real estate agents shows FOMO remaining at the high level registered just after the nationwide lockdown started on August 18.
The gross proportion of agents who replied to the survey say they see buyers’ FOMO increasing. It has risen from 66% in July to 71% in August and 72% at the end of September.
Alexander says the FOMO gauge shows conditions in the market nationwide were weakest over the April-May period immediately following the shock Government announcement on tax changes.
“Since then FOMO has recovered, but has yet to regain the levels seen before March 23.”
An increasing number of agents feel prices are rising in their location.
In fact, this gauge is at a seven-month high, says Alexander.
However, he says the net proportion of agents reporting they are seeing prices rising in their location has yet to regain the 88% seen in February just before the tax change announcement.
But at a net 67% positive this month this price rise indicator is the strongest it has been in seven months.
Alexander says it is notable that after a small dip in the August survey, which was undertaken after one week of nationwide lockdown, the prices gauge has risen quite firmly.
“Perhaps the generally high awareness of what happened with house prices the last time a nationwide lockdown ended has encouraged extra buying and reduced willingness to sell,” Alexander adds.
He says on average between 2011 and 2014 when this same question was asked in a previous survey, a net 31% of agents responded prices were rising.
The nationwide pace of price increase back over that 2011-14 period of time averaged just over 5% per annum.
Investors backing away
Investors continue to back away from making fresh purchases of existing properties, while the level of enquiry from offshore remains very weak.
Measures of investor buyers in the market were easing ahead of March 23, deteriorated further after the tax announcement, and have only marginally improved from the lows of April through May.
This month a net 33% of real estate agents nationwide have reported seeing fewer investors looking to make a purchase.
“Given the Government’s explicitly stated goal of discouraging investors from purchasing existing properties and given that most listings are for existing properties rather than new ones, the Government can claim success,” says Alexander.
“Where they cannot however claim much success is in suppressing the pace of growth in average house prices by much.”
More investor properties on market
A net 4% of agents feel investors are bringing more properties forward to sell.
This is a turnaround from negative results (fewer investors looking to sell) over the previous three months.
The direction of change is in line with the jump in the proportion of agents seeing more people asking for appraisals of their properties.
But the net 4% is small, and well away from the 12% result of April.
Alexander adds, as yet, there isn’t any solid evidence to back up reports investors are selling off their property assets in response to the March 23 tax changes, which have just been clarified and confirmed.
The survey has produced just the one substantially changed reading.
For the past five months, more agents have reported seeing fewer people getting their properties appraised.
“But in our late-September survey a net 29% of agents have reported a lift in appraisal requests,” says Alexander.
“This is the strongest result since October last year and could be an early sign that more people are thinking about placing their property on the market,” he adds.
“We will be examining gauges from other surveys to see if this might be happening, and if it is, then when combined with the backing away of investors from buying existing properties [this] could become a signal of a more sustained period of slowing in house price growth, but we do not appear to be there as yet.”
There has been a rise in the number of agents noting buyers having difficulties sourcing finance.
“Given the tightening of lending criteria underway, and with more to come – probably in the form of debt to income restrictions – these concerns are likely to increase,” says Alexander.
The survey also shows a small dip in the number of agents feeling buyers are worried about interest rates.
He says this may reflect the absence of the expected tightening of monetary policy in August and the fact that although mortgage rates have risen 0.6%-1.0% they remain at extremely low levels.
“This measure is highly likely to gain in importance over the next two years.”