Residential real estate market shows signs of cooling

Some slight cooling in the residential real estate market has appeared in the December BNZ-REINZ survey.

BNZ chief economist Tony Alexander said most, but not all, of the measures the survey tracked showed some cooling.

Most notably, a net 13% of responding agents noted they were seeing fewer people at open homes.

However, there had been a rise in the net percentage who felt that buyers were more motivated than sellers.

Readings remained strong for perceptions of prices rising and interest from investors.

''Overall, the housing real estate market is showing some signs of flattening out but on the face of it, this could reflect buyers needing to adjust their price settings, rather than failing to show interest at all,'' Mr Alexander said.

The December result of fewer people going through open homes was the weakest result on record and a sharp turnaround from a net 30% positive in November.

The net change of -43% change was far greater than the drop-off in December last year of 20% and could suggest that buyers had backed away sharply from the market, he said.

Given the suddenness of the change, Mr Alexander made a special effort to see if any of the other indicators the survey tracked showed signs also of a decline in buyer interest.

''The answer is some do - but not to the same degree - and some don't.''

A still strong net 27% of responding agents said they were seeing written sales going unconditional. That indicated nothing sudden had happened during the month to cause buyers to find excuses for backing out.

A net proportion of agents saying that auction clearance rates were rising had dropped to the lowest level since April, with a net 12% positive from 22% in November.

That supported the first indicator regarding buyers not showing up for open homes, Mr Alexander said. The result was only just below the average reading of a net 16% positive and as such did not suggest any particularly great weakness in buyer interest.

Vendors were not rushing forward. For the previous three months, increases had been recorded in the net percentage of agents reporting that more potential vendors were seeking appraisals. In December, only a net 9% reported that happening.

The average reading for the measure was a positive 15% and the latest result could represent more of a return to normality after three months of improving supply.

A near average net 32% of responding agents reported they were noticing more first home buyers in the market.

''This measure has been strong since the start of 2012. But at a net 32% positive, the latest reading is the lowest since December last year and could suggest that high prices might be burning off some of this young buying group,'' he said.

A net 38% of agents reported they felt prices were rising, well above the average reading of 24% and statistically unchanged from November.

Prices were seen overwhelmingly to be rising, with only 41 of 421 respondents saying they felt prices were falling; 192 felt prices were rising and 198 felt prices were flat.

Below-average numbers of people were perceived to be buying because they were trading up or down, while purchasing because interest rates were low remained a strong factor.


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