The housing market ended winter in a soggy state and September will likely be pivotal in determining how it shapes up for the rest of the year.
Sales and prices both declined in August, while stock levels remained high.
The Real Estate Institute of NZ reported 5866 sales in August, down 11.1% compared to July while the national median price was down 1.2% for the month.
Property website Realestate.co.nz had total stock of 30,000 residential properties available for sale at the end of August.
That stock level has declined for five consecutive months since it peaked at 36,870 in March, which is traditionally the busiest month of the year for the housing market.
However, that appears to be a normal seasonal trend, with stock levels usually coming down from their summer peak over autumn/winter.
The 30,000 properties for sale at the end of August this year was up very slightly (1.4%) from 29,579 at the end of August last year. But more importantly it was up 31.9% compared to August 2023 and was at a 10-year high for the month of August.
So while there have been seasonal variations in stock levels over the last 12 months, they remain at very high levels as we head into spring, meaning buyers will continue to have plenty of choice.
Figures for the overhang of unsold properties at the end of each month have followed a similar trend.
Interest.co.nz estimates there was an overhang of 24,600 unsold residential properties at the end of August.
That figure has declined for four consecutive months since peaking at 30,400 in April. However, that also appears to be just a seasonal variation.
The 24,600 overhang at the end of August this year was practically unchanged from the overhang of 24,700 at the end of August last year, but was up a whopping 39.7% compared to August 2023.
The number of properties being withdrawn from sale each month tell a similar story.
These include properties that have been formally taken off the market and those that may still be listed with an agency but are no longer being actively marketed - they are just sitting on the agency's books unloved, unwanted and gathering dust.
Interest.co.nz estimates 3300 residential properties were withdrawn from sale in August. And that figure has declined for three consecutive months from 3800 in May (-13.1%), but was up by 10% compared to August last year and up by a staggering 57% compared to August 2023.
Anecdotal evidence suggests most of the properties being withdrawn from the market were owned by vendors with unrealistic price expectations compared to current market conditions.
All of these figures suggest that the buyer's market that has persisted through autumn and winter is likely to continue into spring.
The one figure that showed substantial movement in August was the number of residential properties coming onto the market.
Realestate.co.nz received 8769 new listings in August, up 13.3% compared to July, up 9.0% compared to August last year, and up 17.8% compared to August 2023.
So unless there's a substantial jump in sales in September, the housing market pendulum is likely to swing even further in buyers' favour for the start of the spring selling season.
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15 Comments
The Real Estate market is poised much like a rugby game (All Black vs South Africa) at half time 7-10.
Anything could happen in the second half.
Interest.co.nz estimates 3300 residential properties were withdrawn from sale in August. And that figure has declined for three consecutive months from 3800 in May (-13.1%), but was up by 10% compared to August last year and up by a staggering 57% compared to August 2023.
I guess many of these vendors will be either up or down-sizing so impact is double this number of sales (less a number who were selling investments or leaving NZ). Still, that is a month's worth of sales, and we can probably assume with current large new listings a similar number will have unrealistic expectations, so in all a large drag on the market with a lot less non first home buyers transacting going forward until venders get real about current value.
I wonder how many thousand chains are waiting for settlement at any time
There seems to be a flight to townhouses going on at the moment - particularly in Auckland, Hamilton and Tauranga. This skews values downwards, making things look worse than it actually is. Having said that, some people with standalone houses on larger sections will have to sit tight for a while before things improve. Houses listed in sort after locations will still be selling well, but in the current market, the "up-and-coming" suburbs are only seeing modest improvements in sentiment.
Perhaps that what people can actually afford and or access due to speculators holding legacy full sections. That said city living in NZ will look more like overseas aka appartments and or terrace housing. Changing the face of living in NZ one house at a time.
Yes, it's all about affordability. The numbers get trickier once you go north of $1m. There are only so many couples with the combined income to service such large mortgages, so I'm not surprised that townhouses in nice suburbs are selling well. This trend will continue for decades to come as NIMBYism gives way to higher density housing.
Yes indeed, current average AKL price for all expensive and super cheap apartments is...... $946k
only so many can afford 1/2 the Auckland houses, which is why they are not selling.
THERE ARE NOT ENOUGH QUALIFIED BUYERS
There are plenty of qualified buyers in the sub-$1m bracket. FHBs are right amongst it now, and good on them - it's a great time to buy.
I agree, and this likely means there is ongoing pressure for the top half of the market to compress back towards the lower half. Many $1-2 mil vendors will sit refusing to meet the new values, but there will also be some who need to sell who will match against some who bought 10 years ago that want to step up the ladder. Currently the ladder steps are too wide, but if 1.5 becomes 1.3 its easier.
All of these things will occur as clearance starts, vendors meet market matched with buyer bids and this will provide people to sell above 1mil knowing that they will find enough people willing to sell them an upgrade at 1.2mil.
we will know when this is occurring, sales volumes will go up, but prices remain bumpy.... and real estate agents will stop telling us that vendors are missing out, as a country we will all have admitted that 2021 prices are now firmly in the rear view mirror.
I did think this summer, but its not happening so its maybe a 2026/27 summer thing. I think its been cancelled by lack of buyer confidence due to employment concerns etc.
There is no FOMO, market needs economic confidence to clear.
But which FOMO will win out - buyers wanting to get in before out of reach, or retirees wanting to cash out while they're able.
I reckon loss aversion of (paper) money-in-hand will be the stronger force for a while yet
How long until AKL CV's are due again?
will have to sit tight for a while
care to put a timeframe around this belief?
The three D's of Real Estate will set the marginal selling price and astute buyers will set their "reserve" at this levels. Is not my first rodeo, its not many older agents first rodeo...
But most cowboys end up falling off the horse/bull,
just like "that" rugby game, in this Rodeo, the 8 second buzzer has not gone off yet.
Auckland and Wellington should bite the bullet, and take the hit right here right now. Go back to 2015 prices and then watch this market take off. RE in these two cities will rise and rise just like Christchurch.
If all vendors were to do this as a one-off gesture it will benefit the market and many here would agree with it. There are just as many who would disagree and therefore such a thing can't happen
Correct its another 3-4 years to the bottom
The capital gains chasers would rather eat pet food than take a hit to their expected tax free paper gains. While a decent drop would definitely allow transactions to flow, just can't see that happening unless the banks start to bring pressure.
See what happens...🍿
Prices in 2030 will be the same as 2020.
Although there will be further ocr cut soon we are near the bottom of this cycle, already below long term average
When you overshoot in value by so much do not expect values to come back to an average line of support, they will undershoot.
Investors want returns, there are other markets to invest in. They are stubborn and fickle.
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