This winter could be a difficult one for the residential property market, with high stock levels continuing to push down on prices.
At the end of April there was a stock overhang of 30,443 residential properties on the market. That's up 11.1% on April last year, and is the biggest stock overhang in any month of the year in the last 10 years.
The overhang is the number of properties on the market left unsold at the end of each month.
What is particularly concerning about April's overhang figure is it's worryingly high, even though sales levels were reasonable and there was a big drop in new listings during the month.
The Real Estate Institute of New Zealand recorded 6427 residential sales in April. That's up 9.5% on April last year, while Realestate.co.nz recorded 8518 new listings in April, down 29% compared to March this year, and down 26% compared to April last year.
On top of that, interest.co.nz estimates more than 3000 residential properties that had been on the market were withdrawn from sale in April.
Normally, all of those things taken together would see a decline of in stock levels, but at the moment the reverse is happening.
In simple terms, there are more people wanting to sell properties at the moment than there are people who are willing or able to buy them. So sales remain low relative to stock for sale.
That is almost certainly the main reason why prices have remained relatively stagnant even as mortgage interest rates have been declining.
In a hot market, buyers must compete for properties, but in the current market, vendors are competing for buyers.
Buyers have the upper hand and they are playing their advantage hard when it comes to negotiations over price.
That does not bode well for vendors in the months ahead.
Autumn is now breathing its last gasp and in a couple of weeks we will be properly into the winter season. This is traditionally the slowest time of the year outside of the Christmas break for residential property sales.
Increasingly, the market belongs to buyers, vendors must take what they can get.
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