PHOTO: In Tony Alexander’s latest survey of real estate agents, a net 51% reported seeing more people at open homes in July. FILE
The fear of missing out among buyers has made a comeback in the housing market, with indications of price declines showing signs of slowing down, according to an economist’s analysis.
Recent data from CoreLogic revealed a deceleration in the rate of price declines, while Quotable Values noted a reversal of prices in certain regions.
Despite most experts cautioning against an impending housing boom and predicting a patchy recovery, buyers appear to be attuned to the shifting market dynamics. Economist Tony Alexander’s recent survey of real estate agents unveiled a noteworthy shift: for the first time since November 2021, a greater number of buyers expressed concerns about missing out on a purchase compared to those concerned about buying and witnessing further price drops.
In July, a net total of 34% out of 447 respondents reported observing signs of FOMO (Fear of Missing Out). Although this figure remained below the three-year average of 37%, it reflected a considerable surge in recent months. Just three months ago, only a net 9% of agents reported FOMO, while at the same time last year, the figure stood at a net 4%. Interestingly, a significant net 73% of agents reported observing fear of overpaying (FOOP) instead.
This shift in sentiment stems from buyers’ perception that house prices are unlikely to decrease significantly further, and the potential benefits of delaying a purchase have diminished, as explained by Alexander. While this doesn’t necessarily imply a complete halt in price declines, it does indicate that buyers perceive fewer possibilities for drops and are consequently reentering the market.
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Furthermore, this trend is not an isolated occurrence. The survey highlights robust increases in various indicators of buyer interest, supporting this trend. Notably, open home attendance has risen, with a net 51% of agents reporting greater attendance in the past month, contrasting with the net 48% reporting reduced attendance in November.
Similarly, a net 30% of agents noted increased participation in auctions last month. This uptick in activity is paired with a strong presence of first-time home buyers, as indicated by a net 58% of agents reporting increased participation in the market. While first-time buyer interest had turned positive earlier in the year, a significant surge was observed in the May survey.
The combination of declining prices, rising wages, and increasing rents has led many potential buyers to conclude that waiting longer may not be advantageous. These buyers are aiming to capitalize on a market with limited investor competition and a reasonable inventory of available properties, all before the market experiences another upswing. This heightened buyer activity is particularly evident in the lower end of the market, serving as an additional indicator of first-time home buyer involvement.
The survey further revealed a rise in requests for property appraisals, with a net 33% of agents noting an increase in July. This figure marked a notable rise from the previous month’s net 13%. This surge suggests the likelihood of more new listings entering the market in the near future, providing buyers with a broader range of options.
However, historical trends indicate that when the market picks up, the influx of buyers tends to outpace the number of new sellers, leading to a decline in end-month listing stock—a trend that has already been observed since the beginning of the year.
Realestate.co.nz’s latest data indicated that new listings hitting the market reached a new low in July, accompanied by a 12.4% year-on-year decrease in available stock.