Last week I wrote about the strong restraint being applied to the housing market from not just the fastest increase in fixed mortgage rates on record, but tightening credit conditions. This week I can report confirmation of a shift in the real estate markets around the country from the monthly survey of real estate agents I undertake with REINZ.

Let’s start with my favourite indicator and the only one of its kind published in New Zealand – FOMO. The gross proportion of agents saying that they could see “fear of missing out” on the part of buyers was a lowly 35% back in my first survey in April 2020. The reading soared to around 90% when the market frenzy was its strongest between August last year and February this year.

The reading dropped away to 49% after the March 23 tax announcement. It then recovered to sit at almost exactly 70% for the past three months. The latest reading however from just a week ago is only 39%.

That is, only 39% of agents say they are seeing FOMO. This is the second weakest result since the survey started. Other statistics back up this withdrawal of buyer panic. In October a net 10% of agents said that fewer people were attending auctions. The latest result is 47%. A net 24% last month said fewer people were visiting open homes. That now stands at 61%.

Which group is pulling back the most? A month ago only a net 2% of agents said that they were seeing fewer first home buyers. Now a net 56% say that. For investors the change is from 40% to 53%.

Other interesting numbers are these. 73% of agents say one of the main concerns which buyers report is getting finance – a record high. But only 41% say shortage of listings – a record low. This is where things get interesting.

Agents are reporting that listings numbers are rising. Those vendors who have been holding their properties off the market as long as possible to get the highest price are now stepping forward, concerned perhaps that they have missed the peak. In coming months this rise in listings will also bring forth those vendors who have been holding off selling because they were fearful of not being able to buy again.

More supply coupled with the existing pullback in buyers will result in a fairly rapid slowing of price growth. But back in April 2020 when FOMO was last this low, a net 17% of agents said they felt prices were falling in their location. Now, a net 18% still see prices as rising. The situation is different from back then when prices on average ended up falling 3% nationwide over April and May and by 2.7% in Auckland.

What happens now? In the December 2 issue of my weekly “Tony’s View” publication I run through 17 reasons why the boom in house prices has ended, and 19 reasons why this is not a crash. The main restraining factors of tight credit conditions, higher interest rates, are well known. Others to come include young Kiwis going to Australia and people switching some spending back to foreign travel – eventually. Plus, prices are about 25% above where they would have been without Covid-19.

The supporting factors include a very strong labour market with accelerating wages growth, rising construction costs, high inflation expectations, and banks eventually coming to grips with CCCFA rules, the new LVR regime, and application of DTIs (debt to income restrictions.

As mentioned, the good news for first home buyers is more listings. The good news for investors is less chance the Government will double down on the March 23 tax change and strike again. The good news for society is less worsening of wealth disparities. The bad news? Beyond those who have over-paid at the cycle’s peak I would pick the largest negative impact is likely to be in the market for development land. There are development land price implications from the frenzy ending, acknowledgement that house supply is already booming, and realisation that planned density changes mean there will soon be no land shortage in our five top cities.

- Tony Alexander is an economics commentator and former chief economist for BNZ. Additional commentary from him can be found at

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