Prices but few sales: buyers are “just looking”, while overseas investors eye the housing market?

The latest data from local trading website Trade Me shows that buyers' intentions to purchase in the current property market have reached “freezing point”. A survey shows that fewer than around 1/4 of people remain keen to search property listings on its website and plan to buy.

Buyers fear falling house prices, but investors remain confident

Trade Me recently surveyed 2200 people browsing property listings on its website and found that only 21% intended to buy property this year. The survey shows that most respondents believe now is not the best time to buy, with just 38% of property owners and 27% of renters believing now is a good time to buy. Notably, 55% of investors say now is a good time to buy, but this group accounts for only 10% of all respondents. Among the other respondents, property owners account for 55% and renters for 22%.

Commenting on the survey findings, Trade Me Property sales director Gavin Lloyd says buyers' three biggest concerns are pressure from rising interest rates and mortgage interest payments (31%), inflationary pressure (20%) and a lack of suitable properties (13%). He has found that these buyer concerns are already reflected in the market. From November 2022 to January 2023, New Zealand's national average asking price fell for a third consecutive month. This brought the national average asking price in January down to NZ$878,800, an annual decline of NZ$79,150.

Lloyd explains that, amid concerns over high interest rates, 47% of property owners and 42% of renters believe house prices will continue falling next year. He says that, given falling house prices, he predicts a recession in mid-2023. This, along with the general election in October, will have a significant negative impact on buyer and seller confidence this year. There is, however, a positive side to the market. The survey shows a relatively high proportion of investors (55%) believe now is the best time to buy. This may mean the market has passed its worst point, house prices are approaching their trough, and investors are once again seeing fresh opportunities for property investment profits.

Overseas investors gain ground

New Zealand housing development is in full swing

Reports suggest that, since September last year, overseas investors have bought more than NZ$123,000,000 worth of land in Auckland, encouraged by New Zealand government incentives for new residential construction. The largest of these overseas buyers is Neil Group, a company registered in the Virgin Islands and reportedly owned by Malaysian and Singaporean investors. In November, the company notified New Zealand's Overseas Investment Office (OIO) that it had purchased 13 hectares on Trig Road in Whenuapai for NZ$49,000,000. The company will build a development totalling 300 homes in Whenuapai.

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On its website, Neil Group outlines details of the 300-home development, inviting individuals and families with the financial capacity to jointly develop the project and share the returns from developing the land.

Another company applying to buy land is the familiar housing giant Fletcher Residential, whose shares are held by Australians (55%), Americans (13%) and British investors (5%). In December, it notified the OIO that it had purchased 0.7 hectares in Onehunga from Kāinga Ora for NZ$7,600,000. It will build 62 homes on three “superlots” to replace the previous state houses, and has committed to making at least 30 of them “KiwiBuild homes affordable for first-home buyers”.

Disclosures under the Official Information Act show this is not the only public land Fletchers has bought. For an undisclosed price, it purchased a 4.27-hectare former quarry at 100 Morrin Road in St Johns from Auckland Council's development agency, Eke Panuku. The company is developing 204 homes there, mainly townhouses and apartments, but also including 60 retirement village units.

Fletchers also purchased 4.9 hectares in Rosehill for NZ$36,900,000, where it will develop 114 homes and a retirement village with 60 units. Retirement village developer Metlifecare also purchased 8.6 hectares on Jellicoe Road in Pukekohe for NZ$23,000,000. The project is owned by the Luxembourg-based EQT Partners infrastructure fund, valued at €9,000,000,000.