Open home attendance is up, suggesting the shock of the Reserve Bank’s record official cash rate (OCR) hike late last year is passing, economist Tony Alexander says.
In November, the Reserve Bank raised the OCR by 75 basis points to 4.25%, and predicted more rises to come, along with a recession and an increase in unemployment.
Shortly after, Alexander’s regular survey of real estate agents revealed that had an immediate impact on the housing market, with a significant drop in the number of people attending auctions and open homes.
But in his latest survey a net 2% of agents reported more people were attending open homes in January, up from the net 48% who said fewer people were attending them late last year.
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Alexander said there was a story in the indicators’ trajectory, which had gone from a net 3% reporting more people at open homes, down to a net 48% seeing fewer, and then back up to a net 2% more.
It was likely to be an early indicator of people pulling back from the brink they were pushed to by the Reserve Bank’s talk, he said.
“The worst of the shock of the monetary policy change seems to have passed, but we are still left with a weak market, and that is not set to change yet.”
A net 33% of agents said fewer people were showing up at auctions in January, up from a net 39% late last year, the survey showed.
At the same time, a net 59% of agents reported house prices were falling, and that was little different from the net 74% of two months ago and consistent with price change observations since early last year.
First-home buyer presence was still down, but a net 3% of agents reported seeing fewer first-home buyers, up from a net 16% in the last survey.
Alexander said first-home buyers were not back, but they were not standing as far away from the market, and open homes, as they were at the end of last year.
“I wouldn’t be surprised if that indicator turned positive in the next survey, as responses to my mortgage advisers survey, which is under way now, suggest an increase in their numbers recently.”
It was a positive sign, but the survey showed buyers remained concerned about prices falling after they made a purchase, rising interest rates, and access to finance, he said.
“And investors remain largely out for the count, as they have been since March 2021, because there are too many negatives for them, including tax policies and LVR restrictions.”
That meant it was still far too early to say the market might be improving, he said.
“There will not be any change until the interest rate discussion moves on from ‘more rate rises are coming’ to ‘that is probably about it on rate rises’.
“It will be a while yet before we get to that point, although there have been some decreases in rates recently.”
ANZ cut a number of its home loan interest rates last week, and Westpac reduced the interest rates it charges on three of its home loans on Tuesday.
Kiwibank chief economist Jarrod Kerr has said interest rates have peaked around the world, and the housing market was likely to bottom out this year.