Housing market continues to grind along the bottom

Property / news

Average asking price on Realestate.co.nz declined for the fourth consecutive month in June

3rd Jul 23, 8:01am by Greg Ninness

The latest figures from Realestate.co.nz suggest the housing market continues to grind along the bottom over winter.

The property website received 6218 new residential listings in June, down 21.2% compared to June last year and down 17.6% compared to pre-Covid levels in June 2019.

However, buyers will still have plenty to choose from, with the total amount of stock available for sale on the website remaining at elevated levels.

Realestate.co.nz had a total of 24,676 residential properties available for sale at the end of June, which was down just 6.1% compared with June last year in spite of the huge reduction in new listings.

However, the stock levels in June this year were up by 78% compared to June 2021 and up by 4.9% compared to pre-Covid levels in June 2019.

Asking prices continued to weaken, with the national average asking price declining for the fourth consecutive month to $841,688 in June, which means it has declined by $80,744 (-8.8%) since June last year.

The latest figures suggest the market is following its usual seasonal pattern and it is normal for both new listings and total stock levels to peak around March each year and then decline over autumn and winter before picking up again in spring.

One bright spot in the latest figures was that the number of people searching for properties on Realestate.co.nz in June was up 8.6% compared to a year ago.

However, the relatively high stock levels in spite of the big drop in new listings and the ongoing decline in prices suggest significant numbers of both buyers and sellers are preferring to sit on the sidelines for the time being rather than commit to a sale or purchase.

"We know that Kiwis are feeling the effect of inflation and rising interest rates in their pockets right now and I think some property owners are watching to see what happens next," Realestate.co.nz spokesperson Vanessa Williams said.

"We may see this pent up supply hitting the market later in the year."

The comment stream on this story is now closed.

You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

67 Comments

by IT GUY | 3rd Jul 23, 8:28am 1688329721

Very Green Shooty

by nicko252 | 3rd Jul 23, 8:37am 1688330237

You need to lay off the Green Smokey.

by IT GUY | 3rd Jul 23, 5:27pm 1688362064

Even a Stoned Blind Freddy can see the market is still not at the bottom

by Dgm | 3rd Jul 23, 11:29am 1688340594

The green shoots that the spruikers were referring to is becoming dead shoots.. more rate rises on the horizon

by Pa1nter | 3rd Jul 23, 8:42am 1688330530

The property website received 6218 new residential listings in June, down 21.2% compared to June last year and down 17.6% compared to pre-Covid levels in June 2019.

So at the moment, there's more discretionary vendors sitting out than financially stressed vendors trying to bail.

* Stares at clock some more *

by Retired-Poppy | 3rd Jul 23, 9:05am 1688331913

"stares at clock some more"

Don't worry, home time soon↘️

by Pa1nter | 3rd Jul 23, 9:07am 1688332026

I hope not, works lame and I'm having time off.

by DDDDebt | 3rd Jul 23, 9:12am 1688332363

Yes - but if no one but stressed out vendors are selling, then that's what sets the price (and the continued falls)

A place in queenstown went under contract last week for $1.45m - the vendor had wanted $2m+ (homes.con valuation $2.2m)

As it's such a small town the buyer did some digging via his network to find out the vendor had a $1m+ mortgage that they could no longer afford

Hence an offer that reflected what it was worth in 2018.

by Pa1nter | 3rd Jul 23, 9:27am 1688333240

but if no one but stressed out vendors are selling

We don't really know the proportion of distressed vendors vs otherwise. 'not as many some have been expecting' is what the figures are currently telling us.

Tomorrow, who knows.

by Befuddled | 3rd Jul 23, 9:30am 1688333401

Can you let me know which property? I'm keeping an eye out on property down there.

by DDDDebt | 3rd Jul 23, 4:50pm 1688359846

I don't know sorry, it was a mate of a mate who bought it

Market looks to have turned downwards there... plenty of new builds (I would suspect some are builders spec homes they NEED to sell) hitting the market

300+ for sale in Wanaka including 100+ sections

I'm sure you're smart enough to low ball on any first offer

by CN - new | 3rd Jul 23, 10:28am 1688336883

"but if no one but stressed out vendors are selling, then that's what sets the price (and the continued falls)"

Key question is: how many residential property owners will be unable to hold on?

by K.W. | 3rd Jul 23, 11:19am 1688339944

Was it 5 years old by any chance? Two in Chch just did the same this week, both just out of their 5 year Brightline period. My guess is that those distressed vendors have been holding on for a few months to get out of Brightline, and these prices are now going to be what we see going forward as more and more of them hit the market over the next 3 years. Just wait until the new prices hit the statistics!

by CN - new | 3rd Jul 23, 11:41am 1688341281

"Hence an offer that reflected what it was worth in 2018."

Meanwhile mortgage interest rates are back at levels last seen in late 2008 (i.e a 15 year high). Mortgage interest rates back then were falling which is in contrast to current conditions.

by K.W. | 3rd Jul 23, 11:15am 1688339703

They are called Mortgage Prisoners, they can't sell because they cant qualify for a new mortgage to buy something else.

by mikekirk29 | 3rd Jul 23, 9:06am 1688332003

This tripe about “buyers lots to choose from” is tired and useless. Buyers are away and will remain so til end of down cycle which is no where near and won’t be til 2024 probably May.

What overshoots must revert to mean

So, when price taking inflation into account, is down 35% off peak, then cycle will stabilise

by kiwimm | 3rd Jul 23, 9:06am 1688332005

"Grinds along the bottom"

More like finds a new bottom on its long journey to the ultimate bottom

by rav | 3rd Jul 23, 9:08am 1688332136

"However, the stock levels in June this year were up by 78% compared to June 2021" Sums it up.. Supply VS Demand..

by HouseMouse | 3rd Jul 23, 9:10am 1688332258

So , will the next 6 months see the total disappearance of any minuscule credibility the economists have left?

by kiwimm | 3rd Jul 23, 9:15am 1688332555

How many times do TA and bank economists have to wrongly predict the bottom before they lose all credibility?

by bw | 3rd Jul 23, 9:43am 1688334186

We all know that there is no Santa Claus, but each year, we tell a new batch of the innocents that there is, and go through a whole pantomime to assure them so. (i.e. Economist preach to the converted)

by Harvey W | 3rd Jul 23, 10:00am 1688335204

Is there anyone on here who can give us a sense of whether the cost of building is reducing, if so, how much? - 5%,-10%? And a forecast for the next 6 months?

by HouseMouse | 3rd Jul 23, 10:12am 1688335943

It has flattened out a bit but not meaningfully dropping - yet.

by Pa1nter | 3rd Jul 23, 10:15am 1688336106

Flat, to increasing.

Some commodities like timber will fall off a bit.

by rastus1 | 3rd Jul 23, 10:29am 1688336976

.not increase due to all those burning Canadian forests?

by Pa1nter | 3rd Jul 23, 10:36am 1688337383

Hard to say. Timber production ramped due to covid supply challenges and demand, and suppliers and builders have excess stocks. Demand will wane as housebuilding tails off so there should be some discounting to clear stock.

by Zwifter | 3rd Jul 23, 10:16am 1688336175

Logically its not going down when the price of fuel just took a huge jump. All those supplies have to get moved around the country and Tradies need to get to work in gas guzzling Ford Raptors.

by IT GUY | 3rd Jul 23, 7:37pm 1688369868

Fuel tax did not get taken off Diesel and so has not been added back on.... speed up a bit in fact in AKL its dropped a touch last few days You clearly have no direct knowledge of this market at all.....

by K.W. | 3rd Jul 23, 9:04pm 1688375098

Road User Charges for diesel vehicles were discounted along with the petrol tax, and they have now been restored back to full price as well.

https://www.nzta.govt.nz/vehicles/road-user-charges/road-user-charges-r…

by Zwifter | 4th Jul 23, 8:50am 1688417440

The Ford Raptor is also a petrol engine anyway.

by JamesM | 3rd Jul 23, 4:46pm 1688359599

spoke with a mid/large scale developer on this two hours ago. He is kicking off a $50m+ development mid 2024. He has been in discussion with contractors for almost 12 months. In the last fortnight they have all indicated pricing will be coming off in the coming months. Expectation is an overall drop of at least 5%

by Nellbell | 3rd Jul 23, 4:48pm 1688359716

We had a house costed at 1 year ago and 2 years ago ( 2 different building companies), now trying to get an answer as to whether costs have come back to original either of these levels. Talking to one builder some talk of lower labour rates and suppliers easing prices but they were reluctant to reprice our plans saying most owners wanting to build now are looking at adjusting plans down to something more modest.

Our takeaway from that was that some costs are coming down but not back to 12 or 24 months ago. New building regs have likely caused new price increases over and above our old price also.

I think too early to see real decreases in build costs, maybe if things get really stressed in the building sector prices will drop significantly, but that would probably require the builder to forego any profit just in order to keep his crews busy - have seen that in passed downturns. We got very good prices on a renovation project just post GFC.

We have decided to keep looking for an already established property.

by HughJorgan | 3rd Jul 23, 8:25pm 1688372730

It would be great to see some analysis on what happened in 2009.

by CN - new | 3rd Jul 23, 10:27am 1688336843

Repeated for emphasis:

"We may see this pent up supply hitting the market later in the year."

Key question is: how many residential property owners will be unable to hold on?

by rastus1 | 3rd Jul 23, 10:32am 1688337140

The Greens re introducing legislation that will limit the family home dropping by more than 3%.

It will be funded by a cap gain levy on landlords only, so will be at no cost to the tax payer.

by CN - new | 3rd Jul 23, 11:22am 1688340127

ICYMI, further comments on pent up supply on stuff.co.nz

Williams said with so many holding back from listing, it would be interesting to see what happened when the “dam breaks” and all those who had put off their property sales flooded into the market.

“It is building up, so it will be interesting to see when that dam does break... and we start to see all those properties come on to the market, because there are a certain number of properties that just have to transact every year.”

“We may see a bit of that dam break, but I would imagine it’s probably going to be after the election has settled, and we’ve all sort of accepted what that decision is, and we all move on with our lives.

https://i.stuff.co.nz/business/132463084/hesitant-sellers-behind-dip-in…

by K.W. | 3rd Jul 23, 11:27am 1688340450

As of April 2023 the 5 year Brightline period implemented in 2018 starts expiring. The dam is breaking alright. Vendors are now free to cash in their tax free capital gains. If they have any left.

by CN - new | 3rd Jul 23, 4:08pm 1688357281

FYI, this is what realestate.co.nz was saying last month

"I suspect we may have reached a so-called 'bottom' of this trend or, at the very least, a turning point. But we will have to watch what happens in the coming months to know for sure."

https://news.realestate.co.nz/blog/new-zealand-property-market-may-2023

Remember as at May 2023, the REINZ house price index for NZ was down 18.0% from its peak.

by K.W. | 3rd Jul 23, 11:25am 1688340333

Last week two 5 year old properties in Christchurch sold for 4% and 10% higher prices than what they were sold for in 2018 when brand new, and both were substantially below their CV (CV $870k sold $750k, CV $3.35M sold $2.69M). Now that the 5 year Brightline period is up, are we finally seeing distressed sales???

by Sluggy | 3rd Jul 23, 11:37am 1688341025

The incessant need to not pay tax, like a God given right.

Bless them.

by kiwimm | 3rd Jul 23, 12:09pm 1688342964

Much better to make a 4% gain tax free after 5 years than taking $100,000s and paying some tax to the man.

by K.W. | 3rd Jul 23, 12:22pm 1688343732

Your maths is a bit off. Its far better to have sold a year ago and made $150k and paid 39% tax on it, then to sell now and make $30k tax free. Which is gone in paying the real estate commission so really you have made nothing.

by kiwimm | 3rd Jul 23, 12:39pm 1688344767

You mistook my comment for serious :)

by Pa1nter | 3rd Jul 23, 12:45pm 1688345149

If the brightline is 5 years, how off is the maths in your example?

I.e. how many houses are selling for 30 grand more than they were purchased for, 5 years ago?

by K.W. | 3rd Jul 23, 1:09pm 1688346551

That is the question isn't it? I only looked at a couple in my immediate area and found 2 last week. Another anecdote of one in Queenstown.

by SND | 3rd Jul 23, 11:01am 1688338873

I read several times it would be over in June. Probably meant June was excluded. Let's wait for the July figures.

by K.W. | 3rd Jul 23, 12:23pm 1688343819

But June of what year?

by nguturoa | 3rd Jul 23, 11:50am 1688341833

ASB fixed rate increased and accordingly the pre approvals will be reduced and the amount buyers can pay for the property.

RBNZ and the government created a mess by giving cheap money to banks to loan to unsuspecting buyers in 2021.

The values of Houses increased to a very stupid and unsustainable amount. But fools always realize it later when they already have been scammed by the Real estate agents. Why are RE companies not in the list of scamming entities yet?

by Nifty1 | 3rd Jul 23, 2:25pm 1688351134

False... it won't change any pre-approvals unless ASB change their testing rate.

by Averageman | 3rd Jul 23, 3:19pm 1688354351

You should still do the calc yourself and set new thresholds regardless.

by Juzz | 3rd Jul 23, 6:13pm 1688364827

Many buyers out there are capped by deposit amount rather than earnings as well.

by nzphoenix | 3rd Jul 23, 4:50pm 1688359827

I've given up waiting and I've seen enough -- I'm buying as a FHB.

I just want a place to live without a P.O.S landlord house-scalper scumbag telling me whether or not I can have a dog or kids. I've been watching the house prices go higher and higher and become even more unattainable with these pricks pulling the ladder up as they go for *years* and *years*.

Maybe I will get ruined by a big jump in interest rates in the next 24 months. Or maybe the market has a bit more to drop down in price (probably). Maybe I am overpaying by buying now. I am just over it and want a HOME.

by CN - new | 3rd Jul 23, 5:02pm 1688360568

The purchase of a house is likely to be the largest purchase for a household.

Some information for your decision making:

These owner occupier buyers met their emotional and physical needs of owning their own home. They also faced the consequences of that earlier choice to buy.

https://www.investorschronicle.co.uk/2012/09/20/your-money/property/ove…

https://youtu.be/iKPG_l1P7lk

https://youtu.be/ugBKnP2FKDM

https://youtu.be/fiCXsu_4BoA

Let's quantify the price of meeting emotional needs, peace of mind, stability, etc

Is that stability, a place to call your own, peace of mind, emotional need worth paying an extra $722,000?

1) Peaker

The median house price at the peak for Auckland was $1,300,000

With an 80% LVR, this is a mortgage of $1,040,000

The 20% equity is $260,000

2) Buyer Today ("BT")

The current median house price for Auckland is $995,000

For a buyer who waited, and used the same $260,000 equity used above, the mortgage at this price would be $735,000 (an LVR of 74%)

The Peaker has a mortgage which is higher by $305,000 (mortgage of $1,040,000 for Peaker vs $735,000 for BT)

As a result of that additional borrowing, at a 6.8% mortgage interest rates over 30 years, Peaker is paying $722,000 more over the 30 years than BT.

Assuming same incomes, and same living costs (food, travel, etc except mortgage), BT can save the $722,000 in payments that Peaker is paying.

Remember that at the end of 30 years, the house price will be exactly the same for Peaker and BT.

BT will have more money available for retirement than Peaker.

Short term emotional and physical needs of the Peaker are met, with long term financial consequences that they may be totally unaware of.

Good luck to you.

by CN - new | 3rd Jul 23, 6:09pm 1688364562

Every $100,000 extra taken out in a mortgage at 6.8% over 30 years totals $236,920 over 30 years. So a buyer who borrows an extra $100,000 will pay an extra $236,920 compared to a person who chooses not to borrow an extra $100,000.

Those that don't borrow the extra $100,000 could have instead saved that $236,920 for their retirement.

by nzphoenix | 3rd Jul 23, 6:27pm 1688365633

Thanks CN. I held out over the peak (not by choice as we couldn’t compete at the auctions then), but that turns out to be a bit of luck. Given the 20%ish drop, I think it is probably less Peaker but probably catching the falling knife a bit.

by NZGecko | 3rd Jul 23, 8:27pm 1688372826

The longer you wait during this crash, the much better off you will be in year 20 (hopefully the time you have fully paid it off! Not 30yrs)

Don't get suckered into the Spruiker line ("When you look back you'll be glad you bought BS) looks to buy/offer only at the valuations of 5 to 8 years ago. These knife cuts, should be minimal.

by nzphoenix | 3rd Jul 23, 10:07pm 1688378858

I’m not paying anywhere near asking that’s for sure.

by Zwifter | 4th Jul 23, 8:57am 1688417860

Like I said previously, good luck in finding a place. Don't let the jealousy of others here distract you from your personal goals. There are thousands of FHB getting into a place of their own every month

by danicriss | 3rd Jul 23, 10:52pm 1688381539

I think CN's point is that if you buy now, a year later you will be the 'peaker' comparing to those who will buy then. Meaning you might pay some 300-700k more than you'd pay if you waited a year

by Zwifter | 3rd Jul 23, 6:18pm 1688365093

Good luck finding a place mate, ultimately in the long run you will look back and not regret it.

by IT GUY | 3rd Jul 23, 7:43pm 1688370184

Clearly that is not classified as personal financial advice, more like farcical financial advice , or make it up as you go along fairy tale BS, this is up there with you not realising that fuel tax was never taken of diesel thus was not put back on, you are a clown are you HW2?

by IT GUY | 3rd Jul 23, 5:38pm 1688362735

If investors are forced to sell, who will buy them, other investors will want MASSIVE discounts, FHBers ???? are they that stupid? spruikers must think so... Most FHBers aspire to own in a better location then they rent, I wonder who is going to buy the crap rentals....

by malamah | 3rd Jul 23, 6:14pm 1688364840

Banks are dollar costing the housing market all the way down by spruiking interest at each LVR intersection point. There is always a greater fool. I’m considering it the investor paradox. You want to buy the house next door at 50% down, but that would revalue your current IP in negative territory. Banks may come knocking the very next day. Blip. Pixels on the screen erased.

by danicriss | 4th Jul 23, 7:05am 1688411142

FHBers ???? are they that stupid?

Don't discount the "you must get on the property ladder" narrative

Anecdotally I know quite a few FHB's of the past 3 years. All smart to very smart. Sometimes life doesn't wait for you

And, most importantly, I'm unsure any of them put their mortgage in a calculator and ramped the interest rate up to, say, at least 7%, prior to jumping on the train

by Speedmax | 4th Jul 23, 8:04am 1688414693

Well if they didn’t put their mortgage into a calculator at 7% none of them were smart to very smart…

by Taubin | 3rd Jul 23, 7:28pm 1688369332

If it's declined for the 4th month in a row, it's hardly "the bottom" is it? It's not like you can hit the bottom of the Mariana Trench, then keep going lower for the next bit.

by starrider | 4th Jul 23, 4:13pm 1688443987

Yet Realestate.co.nz still defines the current housing market as a "sellers market".... say what?