First signs of spring lift in the property market?

Property

New listings starting to rise on Realestate.co.nz suggesting the spring lift is in the air

3rd Sep 19, 5:00am by Greg Ninness

There are tentative signs that the usual spring lift in property sales is underway, with a rise in new listings on property website Realestate.co.nz.

August usually marks the seasonal turning point for the real estate market as more people start to list their properties for sale over spring and this year was no different.

Realestate.co.nz received 7729 new listings in August, up 5.9% compared to July, possibly aided by the Reserve Bank's decision to slash interest rates at the beginning of the month.

The upturn in new listings usually continues through until October but it is still too early to say how strong the spring upturn will be this year. That's because although there was lift in new listings in August, they were still down 11.6% compared to August last year (see chart below for the regional breakdown).

However falling mortgage rates may be having a bigger impact on potential buyers, with Realestate.co.nz reporting 24% growth in new visitors to the website in August compared to August last year, although ironically they would have had less to choose from than they did a year ago.

Realestate.co.nz's stock levels, the total number of homes available for sale on the website, fell for the fourth consecutive month in August to 20,712 at the end of the month, down 2.3% compared to the same period last year (see chart below for the regional breakdown).

That is the lowest number of properties the website has had available for sale in any month of the year since July 2016, and suggests although the market has been quiet over winter, there has not been a glut of unsold properties building up in the market.

"The rates cut took the country by surprise," Realestate.co.nz spokesperson Vanessa Taylor said.

"Prospective home buyers can look at the property market with fresh eyes in terms of affordability, either for a first home, or for those looking to move up the property ladder with a higher level of equity.

"August is typically one of the quietest months for the property market, but reports are coming in from real estate agents that it's like an early spring in terms of buyer interest, despite the cold weather," she said.

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45 Comments

by Pragmatist | 3rd Sep 19, 6:31am 1567449114

There are tentative signs that the usual spring lift in property sales is underway, with a rise in new listings on property website Realestate.co.nz

One of these things is not like the other. Might need to wait till some of those listings have the word 'sold' beside them before declaring the market is taking off.

by Nzdan | 3rd Sep 19, 6:57am 1567450646

Greg is to property what Roger is to the $NZD.

by Yvil | 3rd Sep 19, 9:08am 1567458537

There's nothing wrong with Greg's sentence, he does say "there are tentative signs" which is absolutely correct

by Pragmatist | 3rd Sep 19, 10:05am 1567461907

No, listings are not sales.. they might become sales, or they might not. If there are some signs of increases in sales, perhaps you could point them out.

by Dgm | 3rd Sep 19, 10:27am 1567463257

B&T's sales for august were miserable..

so Listings > Sales, but spruikers will do anything to boost their chances of creating a false image of the situation

by Voiceofreason | 3rd Sep 19, 10:41am 1567464106

One of the signs of a full blown crash would be a lot of places on the market at one time with very few buyers, so this news means nothing yet.

by Pragmatist | 3rd Sep 19, 10:50am 1567464652

"B&T's sales for august were miserable.."

And getting worse by the moment.. when i first saw the banner it was "lowest August in 8 years", and now its 9 years..

by Dgm | 3rd Sep 19, 10:53am 1567464805

do you see the pattern???

its the stairways to hell!!!!

by Zachary Smith | 3rd Sep 19, 7:15am 1567451733

I have noticed the open homes have been reasonably busy around my area and good houses have been selling without difficulty. There is also quite a lot of renovating and developing going on. I'd say the low interest rates and uptick in activity across the Tasman portend a renewed, probably less intense, property boom. For FHBs now may be the time to buy rather than holding on any longer. You can't sit around forever waiting for doomsday.

by bw | 3rd Sep 19, 7:32am 1567452763

"...uptick in activity across the Tasman ..." ? Maybe...but probably not.

"..Australia is in recession. Can an economy grow by house prices alone? We’re about to find out because everything else is headed south fast."

The answer to that question is No, but the remainder of the sentence looks about right.

https://www.macrobusiness.com.au/2019/09/australia-is-on-the-verge-of-r…

by Advisor | 3rd Sep 19, 10:08am 1567462130

Used car imports have fallen drastically in NZ while new car sales have slumped as well. The average household is holding back on replacing their car with a flash, pre-owned Nissan Tiida
Given all this, why wouldn't economists believe that FHB's will leverage the next 20 years of their meagrely-growing income to buy an overpriced house.

by gingerninja | 3rd Sep 19, 8:43am 1567456988

Timing the market is hard, and has to ultimately be based on individual circumstances cost of rent and savings income v's actual cost of home ownership vs the psychological benefits of homeownership vs the pain of your home potentially losing value. Market timing is not entirely subjective though, there are measures to lend some objectivity. You can't know the absolute bottom, but you can make a fairly educated stab at the moment the market is just about to start improving again, which is near as dammit to the bottom as you can probably get. Over the years, I have gleaned the following from various comments on interest.co.nz

If the market is about to warm up again (ie nearest you can get to the bottom of the market cycle);
3 months of declining inventory YoY
3 months of declining mortgage defaults
3 months of rising auction clearance rates YoY
3 months of increasing sale volumes YoY
3 months Days on Market decreasing Yoy
3 months of asking prices increasing YoY

In addition where is the 6 months supply (ie= total number of homes sold per month divided by the total number of homes on the market)
Above 6 months supply = Buyers market
Below 6 months supply = Sellers market

One of these measures is not enough, you need to see most of them move.

Human behaviour is highly predictable. Fear and greed are deeply rooted evolutionary motivators deep in the Amygdala. If you can battle with FOMO you are bucking the trend. Try to use whatever objective measures you can. 3 months YoY data is indicative of a trend. If you want to be very conservative, maybe 4-6 months, but know that you won't get the absolute cheapest but perhaps saved yourself from a dead cat bounce or double dip so look to global head winds and the economic news for signs of a false spring!

by Yvil | 3rd Sep 19, 9:12am 1567458762

Great post Ginja!

by blowjoy | 3rd Sep 19, 9:48am 1567460933

Good houses are never difficult to sell. The stagnate or declining prices for some are just the market paying up the debt for years of bad design and construction.

by Taubin | 3rd Sep 19, 7:18am 1567451886

Increases in listings does not necessarily equate to increases in sales. Unless there is the same (or even similar) increase in sales, this is a useless metric.

by Fritz | 3rd Sep 19, 8:40am 1567456812

And listings always lift a lot in spring

by RickStrauss | 3rd Sep 19, 8:57am 1567457874

Easier to sell a damp house when it's warmer.

by Iceman | 3rd Sep 19, 8:10am 1567455044

My prediction- FHB price range till about 750k will be steady as she goes with the potential to go gangbusters. Price range above that will require some level of vendors meeting the market. Another interesting point, we tend to follow the Australian market, and things are picking up there too driven by low interest rate. About to list our home so will be the heat of things!

by mikekirk29 | 3rd Sep 19, 8:12am 1567455125

RE NZ listings 2 years ago for Auckland were 20% lower. This extra is inventory they cannot sell. What you need is stats on listings 3,4,6 months old. Looking and listing does not equate to sales. Last 3 months Auckland residential sales are 12% lower than in 2018 and exactly flat cf 2017. I watch re nz like a hawk and it’s total listings is still falling. Disappointed in lack of detail in this article therefore or rather selectivity

by Dgm | 3rd Sep 19, 8:16am 1567455387

Regards to Auckland, listings DOWN, Stock UP, asking prices DOWN, which equates to AUCKLAND being DOWN DOWN DOWN

by Fritz | 3rd Sep 19, 8:21am 1567455700

Following Aus so soon? It's not that simple.
Their housing supply boom kicked in 2-3 years ago and was a factor in their price slump.
Ours has only kicked in in the last 12 months.
The low OCR will provide some market support, but I suspect it will be short lived

by youngdumbandbroke | 3rd Sep 19, 8:36am 1567456602

Yea I reckon the OCR cut will have a minimal effect as many FHB can't even afford a deposit, never mind worrying about the debt servicing costs.

by Fritz | 3rd Sep 19, 8:42am 1567456927

Agree. But see below.
A 10% deposit on a 800k home becomes a lot more doable than a 20%.
Decision on LVRs is critical.

by Yvil | 3rd Sep 19, 9:17am 1567459079

Very good point indeed, all eyes on the LVR decision at next RBNZ MPS

by youngdumbandbroke | 3rd Sep 19, 9:56am 1567461395

Yes it will the 20% deposit is a major hurdle. However, do you think the banks will allow 10% deposits in the current economic climate?

by CourtJester | 3rd Sep 19, 9:58am 1567461502

I wouldn't be surprised. Responsible banking seems to be a thing of the past.

by Fritz | 3rd Sep 19, 11:48am 1567468097

I wouldn't be surprised either. In fact I expect it. Profit comes way above everything else

by Pragmatist | 3rd Sep 19, 12:18pm 1567469896

Was chatting to a broker online, apparently yes, 10% deposits are still okay (with adequate income and credit record), and even 5% deposits are possible, but you pay for it in higher interest rates, no cash payment etc.

by Fritz | 3rd Sep 19, 1:00pm 1567472456

Useful Intel. How commonly are they allowing 10% deposits for FHBs? If fairly commonly then potentially lvr changes in November wouldn't have a big impact.

by Pragmatist | 3rd Sep 19, 5:38pm 1567489132

I didn't ask, but nothing in the exchange made me think it was too much of a challenge with a decent income behind you.

by Fritz | 3rd Sep 19, 8:31am 1567456309

November decision on LVRs will be critical for the housing market through 2020.
I think they will loosen the shackles a lot because they know that our urban economy is a one trick money.

by Pragmatist | 3rd Sep 19, 10:40am 1567464043

Will it matter? Are the banks actually bouncing off the limits as it is, or are their own limits/ the CAR the real limiting thing?

by SmoKey | 3rd Sep 19, 8:47am 1567457221

People need spending money for Christmas, right ? Property is the ATM they go to, sellers, real estate agents, et al.

by Cowpat | 3rd Sep 19, 8:55am 1567457710

With new listings up 78 percent it could be a tough time on the West Coast property market .Although I feel a Bindi of Gisborne fame moment is close at hand.

by Yvil | 3rd Sep 19, 9:06am 1567458362

Kudos Greg for writing the article at 5am !!!
Listings 11.6% down and site visits from potential buyers up 24% (both on August 2018)… will make for an interesting spring indeed!

by Glitzy | 3rd Sep 19, 9:57am 1567461433

This is only part if the story. The real question is how much stock is being held back by developers for fear of flooding the market.

Perhaps a three way comparison of total sales, listings of existing homes and the number of completion certs issued might give some answers.

by house hunter | 3rd Sep 19, 10:05am 1567461934

Hard to say for sure what the market is doing right now. My sense is that there is a fair amount of stock out there where the vendors are still looking for unrealistically high prices. At the very least I expect the screws to be turned on some of these, as buyers realize they are in the driving seat. Even 6 months ago I saw instances of buyers being happy to throw in an extra $100K or more to secure a purchase on high end properties. Perhaps things will be different this spring - time will tell.

Here are a couple of potentially interesting comparisons if/when they sell:
Sold for 2.88m one year ago: https://www.realestate.co.nz/3587467
Sold for 4m just over 4 years ago: https://www.realestate.co.nz/3615407

by Milkyone | 3rd Sep 19, 10:29am 1567463344

Is going to be a very interesting Spring, thats for sure.

I have certainly noticed that the certainty of predictive commentary on this site has dropped dramatically, from both sides, in the past few months. It really does feel like the whole thing could go either way, and most commentators are holding their breath waiting to see.

As a cashed-up FHB'er, it is certaintly a nerve-wracking time!

by Fritz | 3rd Sep 19, 10:38am 1567463894

Agree, I feel far less certain in my views.
In particular, I think a minor lift-off in the market is possible now, especially if the LVRs are relaxed.
Not a good outcome, in my view, but here is the reality of our property-reliant urban economy.

But there are some headwinds that may limit the lift-off:
- How much new housing is actually coming on line in Auckland, and how might that affect the market?
- How much will the economy drop and how much will unemployment rise?

by Voiceofreason | 3rd Sep 19, 11:44am 1567467844

The RBNZ seems intent on doing whatever necessary to keep the market pumped and the mortgage debt flowing.

by Fritz | 3rd Sep 19, 11:51am 1567468284

Yes. And the willpower amongst policy makers to keep the market afloat is always a strong barrier to letting the crash that needs to happen, happen.
But the day of reckoning will come, it might just be a few years later rather than in the coming year.

by youngdumbandbroke | 3rd Sep 19, 1:34pm 1567474463

I don't understand why policy makers continue to try and avoid market correction - the longer the market is artificially propped up, the worse off everyone will be. They should have kept it under control in the first instance

by theglc | 3rd Sep 19, 1:02pm 1567472572

Michael Crichton. "I am certain there is too much certainty in the world"

by Voiceofreason | 3rd Sep 19, 11:42am 1567467737

Anyone notice the -0.3 asking price drop for Auckland, down again. If this carries on for a year, we're looking at a continued downward slide. We'll have to see. If there's a pick up, it'll certainly be due RBNZ's aggressive rates drops.

by theglc | 3rd Sep 19, 12:56pm 1567472193

Akld still in the Doldrums