Full article below as written in Stuff:
By Miriam Bell
An increase in the number of first home buyers entering the market suggests its downward slide might be nearing an end, although it is not there yet, independent economist Tony Alexander says.
Alexander’s latest survey of real estate agents shows that for the first time since last September more first home buyers were stepping forward to buy than stepping back.
A net 5% of agents reported they were seeing more first home buyers in the market in August.
Alexander said it was a marked change from last month when a net 36% of agents said they were seeing fewer first time buyers, and it was the least negative result since last October before the credit crunch hit.
It also validated the findings of his latest mortgage advisers survey, where more advisers reported increased inquiries from first-home buyers than reported decreases for the first time since August last year.
There had also been an increase in requests for property appraisals and in the number of people attending open homes in August, the survey showed.
A net 20% of agents reported more requests for property appraisals, up from a net 13% who reported fewer requests the previous month.
And a net 7% of agents said there was higher open home attendance, compared to the net 47% who said fewer people were attending open homes the month before.
Alexander said this did not mean that the market was recovering, but the results were early signs the market was approaching the end of its free fall, and was likely to bottom out over the next few months.
The lifting of the price caps for First Home loans and grants might be one reason for the improved results, he said.
But the survey also showed some easing of buyer concerns about rising interest rates, paying too much in a falling market, and, in particular, access to finance, and these factors probably also contributed.
“Some first home buyers will have made a more realistic assessment of what they want, and rather than waiting to catch the last few percentage points of the decline in house prices, have decided to take advantage of the buyers market to secure a home in which to raise a family.”
The rise in appraisals suggested more homeowners who wanted to sell had given up hope of getting last year’s price, and were capitulating to the market, which meant more choice for buyers, he said.
“Seller capitulation is not universal though, and there are people who can’t sell at the price they want who are putting their properties on to the long term rental market instead.”
The survey also showed that investors remained on the market sidelines, with a net 34% of agents reporting fewer investors were in evidence. But that was an improvement from a net 60% the previous month.
In recent months, the market downturn has picked up pace, and house prices nationwide were now more than 10% down from the market peak, according to the Real Estate Institute.
The Reserve Bank recently predicted prices could fall up to 20% from their peak, which was in line with forecasts from some retail banks.
But last week CoreLogic head of research Nick Goodall said that while there was not any concrete sign of the market bottoming out yet, there were whispers of the trough not being far away in some places.
How soon things turned around would depend a lot on buyer psychology, but there were already signs of a change in buyer mindset, probably due to predictions that interest rates might not have much further to rise, he said.
