Property investors have backed away from the housing market since the Government’s housing announcement in March, the latest Real Estate Institute/Tony Alexander survey suggests.
Sixty-three per cent of the real estate agents surveyed reported seeing fewer investors in April.
This continued the decline recorded in the March survey, which was carried out after the Government’s announcement of tougher rules for investors. In that survey, a net 41 per cent of agents said they were seeing fewer investors.
A downward trend in investor presence has been apparent in the surveys since the start of December.
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The Real Estate Institute and Alexander said the Government was achieving its intention of dampening investor demand for existing property, but also causing a reduction in the interest of first-home buyers.
A net 8 per cent of agents reported seeing fewer first-home buyers in the market in April. A reading of zero would indicate responses were evenly split.
It was the lowest result since the survey started last May and well down on the net 64 per cent of agents who reported seeing more first-home buyers in November.
Previous house price cycles showed that when predictions of continued strong price gains gave way to talk of prices flattening or falling, young buyers pulled back from the market, the Institute and Alexander said.
“At the very time conditions move in favour of young buyers they tend to step back, taking their cue from what other parties, such as investors, are doing.”
The survey also showed that buyers’ fear of missing out (FOMO) had eased with 49 per cent of agents reporting they were seeing it. That was down from 90 per cent in March and the lowest result since the surveys began.
Only 30 per cent of agents reported that prices were rising. That was down from 56 per cent reported last month and from more than 80 per cent in surveys from September through to March.
But only 7 per cent of agents said prices were actually falling in their area, while a majority (57 per cent) said prices were flat or they were unsure.
In the wake of the Government’s housing announcement, which included tax policy changes for investors, many investors said they would sell.
That did not seem to be happening to date, with just 12 per cent of agents reporting they were seeing more investors coming forward to sell their property.
While this was the highest reading on record and continued a trend in place since December it was still relatively low and not suggestive of a wave of selling emerging, the Real Estate Institute and Alexander said.
“People have likely pulled back from the market for the moment amidst high levels of uncertainty about what other people will do, partly because they see a chance that the frenzy of previous months could have pushed prices to unsustainable levels on average in some locations.”
However, Barfoot & Thompson managing director Peter Thompson said April’s trading was excellent with prices edging slightly higher and strong sales, although sales were down by 40 per cent on March.
Some would interpret the agency’s April sales data to mean the market was barely affected by the Government’s initiatives while others would see signs the changes were slowly having their intended impact, he said.
“But what needs to be remembered is that there is always a seasonal downturn in trading in April from March, and the trends seen this year are similar to those experienced every year for the past 10 years.”
New listings in April were down on both March and the average over the previous three months which suggested there was no major influx of new listings from investors abandoning the market, Thompson said.
“Overall, the market is continuing to trade strongly. There is still a high level of uncertainty as to future direction, and this sentiment is likely to remain until any announcements about housing in May’s budget are absorbed.”