Rough seas ahead for the housing market over winter

Property / analysis

The housing market looks set for a choppy winter with stock rising faster than sales

17th Apr 24, 10:08am by Greg Ninness

The housing market is in a precarious position as activity starts to wind down into autumn.

Sales levels remain well below the level of new listings being received, and the mountain of unsold stock on the market continues to grow.

March is usually the busiest month of the year for housing sales and although total sales in March this year were up 8.0% on March last year, they were at their second lowest level for the month of March in the last 13 years - only March last year was lower.

Which means sales levels have gone from being disastrous last year to merely terrible this year.

What has been picking up rather spectacularly is the number of homes on the market.

Property website Realestate.co.nz received 11,455 new residential listings last month, up 24% compared to March last year.

But the 6521 residential sales reported by the Real Estate Institute of New Zealand in March were up just 8% compared to March last year.

That pushed the total number of residential properties available for sale on Realestate.co.nz to 33,245 at the end of March, up 13.5% compared to March last year. (See the chart below for the monthly trends in sales, listings and stock).

That means there were five properties on the market for every one that was sold last month.

So perhaps it was no surprise that the REINZ's House Price Index took a 1.2% dip last month, with Auckland prices down 1.9% for the month.

A dip like that would be no surprise if it occurred later in the year as the market cools over winter, but this dip occurred in the busiest month of the year.

Looking at the latest figures is a bit like being at the beach and seeing the tide of sales starting to go out, while a huge wave of unsold stock is heading for the shore.

So hold onto your flutterboard, things might be about to get rough.

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44 Comments

by HouseMouse | 17th Apr 24, 10:17am 1713305843

‘Dead cat bounce’ call last Spring seems to have been on the money 👍

by OldSkoolEconomics | 17th Apr 24, 10:49am 1713307745

The headwinds are getting stronger and stronger.

Cant see much reason for inflation to fall for some time.... Oil prices and disruption to shipping (trade) from multiple, worsening wars seem to be the biggest downside risk. Leaves interest rates HFL alongside potential for NZD and GDP to drop further.

by Simon | 17th Apr 24, 10:51am 1713307902

It literally just fell 0.7% in the last 3 months. 4%.

3.3% mid year? Evident local pain and long long time between CPI readings - July cut 0.25?

by ChrisOfNoFame | 17th Apr 24, 11:03am 1713308592

Followed by the inevitable spike in the September Quarter?

See https://www.stats.govt.nz/news/annual-inflation-at-4-0-percent/

by Blackbeard | 17th Apr 24, 12:12pm 1713312764

Normalised interest rates + Job redundancies + Excessive unsold stock = NZ property is Amanita Phalloides - Poisonous death cap mushroom (Don't consume).

by Retired-Poppy | 17th Apr 24, 10:49am 1713307781

Sheesh, and apparently August to October was the last opportunity to buy too!

by ChrisOfNoFame | 17th Apr 24, 11:00am 1713308442

I prefer the more appropriate name - Bull trap.

by malamah | 17th Apr 24, 6:06pm 1713334003

This time last year, all major banks were howling at the moon, signalling that the bottom of the market is definitely in. To their credit, I guess, it worked temporarily. This, and the promise of new government, spurred positive sentiment. That honeymoon has now worn off.

...bought last year thinking it was the bottom... ...about to have a mental breakdown.

by Chairman Moa | 17th Apr 24, 10:30am 1713306645

Another TTP inspirational comment:

No winter lasts forever, no spring skips its turn, buy now before regret sets in!

by IT GUY | 17th Apr 24, 1:28pm 1713317311

Its always darkest... Just before it turns Pitch Black !

by Simon | 17th Apr 24, 10:36am 1713306997

Banks need to sell mortgages, if they don't they'll drop prices and slim their margins knowing they can fatten them again throughout the 30 years they have you on the hook.

5.99% at longer end by August

ps. inflation out at 10:45am?? My pick 3.9% yoy. A lot of pain out there. Fletchers this morning. It'll roll off the edge if RBNZ F around like usual.

by SND | 17th Apr 24, 10:35am 1713306936

Biggest resistance will come from our mindset. We are expecting houses to be booming, always. A one way bet. With a strong ratchet effect on top of that.

by Simon | 17th Apr 24, 10:43am 1713307429

the markets underwritten by first home buyers with 100k kiwisaver (combined) and now both on 100k for driving a forklift around a warehouse. 50k is min wage! That'd do me maybe I'll job hope and try my hand at golf course groundsman or something i actually like - probably end up back over 100k in no time anyway "lead greens research assistant".

Basically - got a job, and not a financial idiot (so have kiwi saver for 5+ years) and you under write markets in most provincial cities - Auckland, Welly not so sure but I don't see them falling other than +/- %5 noise for next 12-24 months.

How far out was I on the CPI?

by RickStrauss | 17th Apr 24, 11:41am 1713310903

$200k is the new $100k.

Wages need to be looked at in relation to housing costs too. Money isn't what it once was.

Funny, really, when we feel entitled to having very high wealth in the form of house prices and rents, but get very antsy if employees of the council that manages the services to our houses get wages over $100k.

by JBA | 18th Apr 24, 7:22am 1713381723

You're out of touch if you think a forklift driver is getting 100k. Try a couple bucks over min wage. The managers don't make 100k.

by yeahrightmate | 17th Apr 24, 10:42am 1713307330

“Hold onto your Flutterboard” lol

by Simon | 17th Apr 24, 10:49am 1713307755

so far up the ladder the only water I see is from my ocean views - go up or down 20% the works been done and that won't bother me. A lot also in this position, older professionals, "capitulation" is for speculators who have been out of the market since March 2020 and likely killed by 11% second tier lenders as already long sold.

by SomeKiwiFounder | 17th Apr 24, 4:51pm 1713329499

Ah twist my arm enough, fine - let's tax the wealthy like it's 1949 again!

by Speedmax | 17th Apr 24, 10:47am 1713307620

Absolutely no surprise. Prices still very high by ant measure, affordability poor, financial stress still increasing, interest rates will not change much this year. Housing stock will start moving when vendors finally accept realistic prices…which most don’t yet

by DavidJ | 17th Apr 24, 10:51am 1713307882

100% ... only one way for this to go over the next few years ... mad to buy now,

by Adam B NZ | 17th Apr 24, 10:47am 1713307660

The North Shore of Auckland is heading into winter with over 1800 listings on Trademe. That is very high compared to past periods.

by chemistpeter@g… | 17th Apr 24, 10:56am 1713308216

Everyone is well off on the NS, until the mortgage rates rise. Cheaper second hand cars coming soon also.

by Simon | 17th Apr 24, 11:02am 1713308552

Are you and your funny looking celeb mate with the way too hot for him mrs still got bets going or otherwise arguing?

I recall you're early celebration that covid has arrived to crash house prices (maybe just your event promo revenue?) - 40% boom follows.

Didn't see you foresee inflation, supply constraint, wars (specifically, maybe geo-polical was mentioned).

Saw you thinking about provinces outside Auckland in 2017-2018. If you'd done that will full leverage you'd have more than doubled your money even on todays values. I was buying 240k - now 580k (960k as developed), 180k -> 480k (was up to 600k at peak but i hate selling even though it felt stupidly priced over 600k in that area. . . and several others not 20 like GF but a few.

Hope your well, money sometimes can't buy health unfortunately for me.

by Adam B NZ | 17th Apr 24, 2:34pm 1713321267

If you jump on the NZ investors and economic chat group you will see that I saw inflation, supply shocks, wars and the geopolitical situation all coming. My posts are well documented in there so feel free to search. I have made a fortune from my investment plays off the back of it all.

by Adam B NZ | 17th Apr 24, 2:39pm 1713321540

We did some of our biggest revenue during Covid btw. Luckily we only had to cancel one event but there was a huge amount of money floating around during that period and we got most of our events done.

by Blackbeard | 17th Apr 24, 10:51am 1713307912

The bottom line is that house prices in NZ are set too high for the average New Zealander. We aren’t a wealthy nation, our home prices shouldn’t be pegged to Oz prices. The log jam of unsold will clear once the market meets the buyers affordability. Needs to drop by at least 30% minimum.

by Joker | 17th Apr 24, 11:26am 1713309968

"So hold onto your flutterboard, things might be about to get rough."

Can you please be more clear, eg "...about to get rough for sellers."

We have sold and actively looking and increased supply / decline in house prices is very welcome!

by ChrisOfNoFame | 17th Apr 24, 10:53am 1713308018

"The housing market is in a precarious position as activity starts to wind down into autumn."

Would precipitous have worked better? Or is my bias showing? ;-)

by Toye | 17th Apr 24, 10:58am 1713308308

If I can use the sinking of the Titanic as an analogy.

Interest rates increasing = Hit iceberg

Dead cat bounce 2023 = nothing to worry about we've sealed the affected compartments.

Today = Too many compartments are affected the ship is sinking and we can't stop it.

Winter = Recent FHBs:

https://m.youtube.com/watch?v=tz4JSTXuP9E&pp=ygUVdGl0YW5pYyBwcm9wZWxsZX…

by 1689 Baptist | 17th Apr 24, 12:04pm 1713312270

I am still holding to a 0% change in house prices in 2024 by years end. The increasing stock is not that shocking (13% up on March 2023). Interest rates are trekking down slowly. Immigration is high. Rents are growing. The cost to build new is astounding. These factors will all counter the high inventory levels.

by Zwifter | 17th Apr 24, 12:14pm 1713312877

3 to 4% gains by the 1st Jan 2025 down here. This government needs to put a lid on immigration and fast or it will be higher still.

by Chairman Moa | 17th Apr 24, 12:25pm 1713313537

Can I call a friend Eddie?

Otherwise lock in 0% please Eddie!

by Yvil | 17th Apr 24, 1:25pm 1713317158

All the factors are present for house prices to drop, high debt, expensive cost of debt, more suppy of houses for sale... so yes, I too expect prices to fall. It's just that we've been expecting this for a long time, and after the initial drop, prices have been surprisingly resilient for at least 6 months... Still, I too expect house prices to drop by end of 2024. If not, I'll have to eat humble pie and I'll hang up my DGM hat for good.

by IT GUY | 17th Apr 24, 1:53pm 1713318784

by xmas 2024 houses prices will be 10% lower then xmas 2023

It is what happens in a recession

by 1689 Baptist | 18th Apr 24, 7:14am 1713381298

It may be that 24 months time, the only crash we can speak of will be inflation adjusted.

by EpsomArtsandCrafts | 17th Apr 24, 3:31pm 1713324694

Its actually not about looking for the right house but looking for the right vendor who has realistic price expectations.

Face it lots of vendors just won't sell if they don't get their inflated price which so a waste of time for buyers and agents.

by Nellbell | 17th Apr 24, 6:43pm 1713336234

It’s a bad situation and sadly the only way I see out of this standoff market is large scale forced sales, which is awful. A number of things are contributing to the current situation (ignoring the obvious problem of huge covid price increase in property). Firstly too many agents entered the industry during the boom period, they are now competing too hard for listings - that is telling the vendors they will achieve inflated, unrealistic prices; next the residential construction sector is broken - so having the option of choosing to build that is normally there for house hunters has not been an option for a few years now; lastly the banks, perhaps worried about their reputation in the light of record profits, have not been moving to act on loans in severe arrears. All these factors mean a normal property market can’t operate.

by Kate | 17th Apr 24, 5:19pm 1713331199

All those GV/RVs previously re-valued at the 2021 peak of the market - are about to receive their new valuations. Provided those valuations follow the market down as it is currently trending - the Mexican standoff might end.

I suspect lots of sellers are reluctant and think that their price expectation - given it is below what their market value went up to in 2021 - is a "good" price. Once we start seeing GV/RVs going backwards there will be a new, accepted norm/understanding that those sorts of prices were never sustainable.

by IT GUY | 17th Apr 24, 7:51pm 1713340287

Yes because banks use CVs, if you want to purchase well above CV you will need a valuation.

And you wont get it so banks wont lend... unless you have huge equity and most will not. Thus the lowering of CV lowers the entire market.

At peak average in my suburb was 16% over cv now its about 15% below, if they fall it will lock in that 30% and setup the next 10-15%

by NZGecko | 17th Apr 24, 9:30pm 1713346255

Yes agree. The pending CVs will also be a total reality check and shock for the many thousands of stressed borrowers out there ....... the banks and OneWolfs much touted hopes of a market revival, ferrying them out of Dodge, will be seen as many of us knew it was, a total mirage.

Post July 2024, will be a market where the few qualified buyers will be hunted by the starving REA wolves. The buyers will have less meat on their bones and shrinking offers ......

by Averageman | 18th Apr 24, 9:11am 1713388269

While I agree the current CVs are a total gouge, cant see council lowering them. They are to much in debt and have to much employment bloat.

by Dale Smith | 18th Apr 24, 11:38am 1713397120

Councils do not set CVs, and they are only used to apportion rates on a pro-rata basis, so do not affect the total rate take.

by K.W. | 18th Apr 24, 1:37pm 1713404227

Already happening lol

https://www.nzherald.co.nz/nz/tauranga-city-council-revaluations-woman-…

by 09BTCer | 19th Apr 24, 6:56am 1713466588

Ya don't say.... So the property market is flat during a brutal recession which came after a global shutdown and time of mass money printing compared to around 10 years of boom times.... Colour me shocked!