This year may be shaping up as the mother of all buyers' markets for residential property.
There are two sets of figures pointing to the market being particularly weak at the start of 2025.
The first is the overhang of unsold stock at the end of 2024.
The overhang is the number of properties listed for sale at the start of a month, plus new listings received during the month, less the number of properties sold during the month.
It represents the number of properties unsold at the end of each month either still to be sold or that are withdrawn from the market.
Interest.co.nz estimates there was an overhang of 28,466 residential properties at the end of December last year, compared to 5518 sales reported by the Real Estate Institute of New Zealand (REINZ) for the same month.
December's overhang was 24.5% higher than it was in December 2023, and the highest it has been for any month of the year since May 2015.
However, in May 2015 the REINZ reported 7952 sales, 44.1% higher than the 5518 sales reported in December last year, so the market was much better placed to cope with the high overhang of properties back then.
Also by way of comparison, the overhang in December 2019, just before the Covid pandemic took hold, was 15,506 properties, meaning it has increased by 83.6% since then.
And of course a big overhang of unsold properties works in buyers' favour, ensuring they have plenty of choice.
The second set of data suggesting the market remains weak as it heads into 2025 is the high number of properties being withdrawn from sale.
Interest.co.nz estimates 3755 residential properties were withdrawn from sale in December 2024, up 43.5% compared to December 2023.
It is estimated that in the whole of 2024, 33,368 properties were withdrawn from sale, up 24.3% from 2023.
Properties can be withdrawn from sale for many reasons, but the most likely reason is vendors could not achieve the price they were hoping for and were not prepared to meet the market.
That in turn suggests buyers remain cautious on price and are prepared walk away from a deal if the vendor is being, in their view, unrealistic on price.
So 2025 is shaping up as an interesting year for residential real estate, but it's likely buyers will still have the whip hand and will continue to negotiate hard on price.
Their reasoning is probably something along the lines of there's plenty more fish in the sea, if they believe a property is over priced.
Although the properties withdrawn from sale have been taken off the market, they represent a latent supply of properties for sale ready to come back on to the market. That's because the reasons their owners wanted to sell probably haven't changed much.
Those vendors probably still want to sell, it's just a question of when, and what might force them to meet the market.
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