Renowned independent economist Tony Alexander’s latest monthly survey shows that the housing market is showing some promising signs, even if it’s far from a genuine recovery.
In an article for OneRoof, Alexander’s survey covers households, businesses, landlords, investors, agents, and mortgage brokers. He has run a separate NZHL Property Report comprising a survey of 287 real estate agents.
Let’s break that down.
Prices Are Sliding, But It’s Still a Buyer’s Market
According to Alexander’s survey, 41% of agents say average prices are still falling in their region. This is a trend confirmed by Cotality's Home Value Index, which recorded a 0.3% drop in national values in July.
43% of agents describe conditions as a buyer's market, a position Alexander says has now held for two and a half years.
However, auction and open home turnout remains weak. Alexander's notes that agents are seeing fewer people through open homes. But the NZHL data shows a slight improvement: agents reported better auction attendance recently than the months before, as the market recovers gradually from the shock of Middle East wars.
What About First-home Buyers and Investors?
Alexander's states investors "retain a weaker-than-average presence in the market" while first-home buyers "are making the most of the power they have over sellers".
35% of agents report more first-home buyers active in the housing market, while investors remain largely absent. According to him, this is more than temporary, as there was a structural shift in investor demand. Investors are growing more cautious ahead of the election and potential changes to property tax settings.
Then there’s also the worry about possible tenancy law changes and the potential loss of interest deductibility, alongside persistent unease over council rates.
No More FOMO
Alexander’s survey mentions that the 'fear of missing out’ among buyers has fallen to just 4% of survey respondents, the lowest level since June 2024. Alexander says he doesn't expect that number to change until the labour market shows clear, sustained improvement.
It’s important to note, however, that buyers are still worried about rising interest rates, job security, and the risk that prices keep falling after they buy. This is mainly due to inflation data, as annual inflation hits its highest in 2 years in June.
Meanwhile, property appraisal requests have increased to 10% from just 1% previously. But that's still well short of the net 50% averages typically seen between September and February, suggesting many owners remain reluctant to list their properties for sale.
The Bigger Economic Picture
Alexander's states that this survey points to a broader economy that's improving only modestly. GDP grew just 1.5% over the past year, unemployment sits at 5.3%, and underlying (non-tradeable) inflation is at 3.4%, just under the 25-year average of 3.5%.
He expects further OCR increases this year and thinks growth above 4% is unlikely in the near term.
“Overall, the survey results show the housing market in a weak state but coming off its lows. Consumers are poking their heads out of their shells, and businesses are willing to back their hopes for higher revenue with increased spending on both advertising and recruitment.
Placed alongside the underlying fundamentals like good farm incomes, good growth in inbound tourists and foreign students, lower average interest rates than over 2023 and 2024, plus a strong lift in consents for new houses to be built, it seems reasonable to expect economic improvement,” he says.
Key Takeaway
The data shows that New Zealand’s property market remains a buyer's market, and first-home buyers are the ones capitalising on it. For builders and contractors, that means margins matter more than ever.
Having the right insurance and bond in place protects builders and gives them peace of mind in uncertain times. If you’d like added protection for your projects, Bonded NZ offers a range of competitive insurance, warranties, and surety bonds. Contact our team today to find out more.
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