The housing market appears to be finishing the year in a slightly precarious position, with a mountain of unsold stock building up. This could carry through to the new year, putting downward pressure on prices over the peak selling months.
October and November saw a surge of properties coming onto the market, with property website Realestate.co.nz receiving more than 12,000 new residential listings in each of those months.
That pushed the total stock available for sale on the website up past 33,000 at the end of both months, meaning the number of properties on the market was at an 11-year high for the time of year at the end of November.
However, that rush of listings and build up of stock was not matched by a burst of sales. In fact November's housing sales were downright disappointing with the REINZ reporting a decrease in sales in November compared to October, something REINZ Chief Executive Lizzy Ryley pointed out had only occurred six times in the last 33 years.
That combination of high levels of new listings and increasing total stock, combined with disappointing sales numbers, has pushed up the overhang of unsold properties.
The overhang is the number of properties that have been on the market for at least a month, meaning they will usually have completed a full marketing programme, but remain unsold.
Interest.co.nz estimates the overhang of unsold properties passed 26,000 at the end of November. That's up 4.8% compared to the same time last year, and up by 37.2% compared to the end of November 2023.
The overhang of unsold properties was also the biggest its has been at the end of November since 2014.
That is a lot of stock to try and move, even before any further new listings come onto the market, and of course December is a short month.
In about a week or so real estate agents will start hanging up their business attire and getting out their beach gear as the market all but closes shop until at least mid-January, and things won't get properly back into full swing until February.
So vendors who are still sitting on unsold properties will be facing some tough decisions.
While it's possible we could see a late frenzy of buying activity before Christmas to reduce the mountain of unsold stock, it's more likely there will be a substantial carryover of unsold properties onto the market in January, just as a fresh wave of vendors start listing their properties for sale as we head into the peak summer selling season.
If that's the case, high stock levels will likely weigh on prices when the market kicks off again in 2026, meaning vendors will need to be realistic in their price expectations.
Potential buyers on the other hand will likely have so much choice they'll be as happy as a pig in mud.
Oink oink!
7 Comments
*will
Specuvestors to rush to the exit. With no future capital gain....what is the point of holding on, especially if you are topping up and rates are indicated to start heading up again?
Cough...it was always about tax free gains...IRD should look at this area very closely in the next twelve months.
So vendors who are still sitting on unsold properties will be facing some tough decisions.
This depends on the level of equity held across an investors portfolio. Highly leveraged may not see expected returns if seeking capital gain, though for those with higher equity who have been around a while and invested for yield will be fine, and can still cash out with significant gains if they choose. Summary: Highly leveraged or new investors may struggle, but established investors likely won't worry.
If that's the case, high stock levels will likely weigh on prices when the market kicks off again in 2026
Hopefully sales stay low and prices continue to drop. The populace will blame the govt for not 'fixing' the economy, when in reality it all relied on govt spending and influx of new money from new lending - predominantly housing. Rational people won't borrow against their houses to say, start a business, if they see the value dropping in their home. Less influx = less credit = less spending = slow or stagnant economy.
This govt isn't willing to inject enough cash to the economy to make up for the loss of credit expansion either, and here we are.
There's something about NZers, they're incredibly stubborn, even obtuse. Sellers will never accept lower prices, that's why the most probable scenario to me is a lost decade: by 2031 prices should be back to the 2021 peak, which in real terms is still negative...
Agreed. Banks are complicit here by enabling this behavior thru extended terms and int ony and payment deferment.
Buyers certainly have the advantage if they want to buy a townhouse. (Don't do it)
These are close to 50% of Auckland listing.
There's your overhang!
🥂
Not a bad first house option to start building your own equity.
Yes... no big future of capital gain. But all those houses are already owned by MiLord, who live off you rent extracted hard work. Or, the price is inflated by the rent seekers to the point its out of reach first home option unless mum and dad slide you a million or two. Many of our future awesome tax payers just vote west, and leave.
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