Spring usually fires Auckland's house sale market up even further but an extension of alert level 4 could affect $2 billion to $3b of monthly sales and vendor numbers are forecast to fall.
Jen Baird, REINZ chief executive, said more vendors would be deterred if the highest alert level continued.
"If Auckland continues at alert level 4, we expect the number of properties available for sale to continue to decrease as a majority of vendors will wait to list at a lower alert level," she said.
An extension couldn't come at a worse time.
"The market is heading into its busy spring season and we know that many are preparing their property for sale now with a view to launching later. But for now, most will wait," she said.
Extending the alert level would also further challenge those awaiting a settlement, whether they are buyers or sellers.
"There will be some people across the region waiting to complete purchases that were started almost a month ago now. For some of these people, the longer the lockdown goes on, the more challenging their position becomes.
"Our message for those people is to communicate with your agent and your lawyer. We know there's a real sense of us being in this together and where they can, people are being very reasonable," Baird said.
Under alert level 4, no open homes can be held, no auctions staged at properties, no appraisals done in person at a home considered for listing, no listings secured on-site and real estate agency offices are shut.
In the last week of July last year, Auckland agents made 623 sales worth $870m and in the first week of August last year, they made 612 sales for $630m. That amounts to $3.4b of sales.
Last September, REINZ said the number of properties sold in Auckland in August rose 44.2 per cent annually from 1812 to 2612 sales which was the highest for the month of August in five years.
Auckland's median house price in August last year was $950,000 so those 2612 sales in the city last year turned over stock worth about $2.4b.
The Real Estate Authority says that under alert level 3, buyers can make private viewings with vendors' written consent. All health requirements must be met.
Two visits or viewings per day per property are allowed. Customers, clients or other members of the public cannot enter agency offices. Visits to properties to support transactions and to complete pre-sale conditions are allowed. Buyers can undertake pre-settlement inspections. Appraisals can be completed by agents.
None of that is allowed under alert level 4, except done remotely or virtually.
Nick Goodall, Nick Goodall, CoreLogic NZ research head, said this month agency work pulled up sharp after mid-August when the alert level 4 was declared.
"Tracking of early market indicators, like appraisals generated by agents using Property Guru and RPNZ, shows real estate agent activity has dropped by 52 per cent compared to the week before lockdown," Goodall said on September 1.
If the lockdown extension results in fewer listings, that would mean a further tightening of supply, which could lead to renewed upwards price pressure as pent-up demand competes for limited listings, Goodall forecasted earlier this month.
But that wouldn't be likely to last long. Even if that burst eventuated, it was likely to be short-lived, Goodall has forecast.
Apart from the prospect of rising mortgage rates and the impact of tighter credit policies, it's important to factor in the weight of worsening housing affordability.
"However, as property values rise faster than incomes, the cost of purchasing a home will simply become out of reach for a growing number of would-be buyers, especially as increasing interest rates start to impact the amount of money people can borrow," he said.