The latest housing market figures have an unsettling aspect to them, not because they are particularly bad, they are not, but because there's almost an air of anxious anticipation hanging over them.
According to the Real Estate Institute of New Zealand, both the volume of housing sales and their selling prices in February (as measured by the REINZ's House Price Index) ended up back where they were in February last year.
Similarly, interest.co.nz estimates there was an overhang of 24,100 unsold properties on the market at the end of February this year, which was barely changed from the 24,300 at the end of February last year. The overhang is the number of properties that remain unsold after they have been on the market for at least a month.
The one figure that did change significantly last month was interest.co.nz's estimate of the number of drop outs for the month. These are the properties that have either been withdrawn from sale completely, or remain technically for sale but are no longer being actively marketed.
Interest.co.nz estimates there were around 2500 dropouts in February this year, up sharply (+39%) from around 1800 in February last year.
However, apart from the increase in dropouts, the overall numbers tend to suggest the market was ambling along in February at about the same pace as it was for most last year, neither a boom nor a bust. This graph shows the trend in prices.
But the trouble with February's figures is that most of the market activity they reflect occurred prior to events currently unfolding in the Middle East and the resulting economic chaos this is causing.
Economic uncertainty has been a constant companion to the housing market this summer, born out of everything from the future direction of mortgage interest rates to potential changes in tax policy.
But the economic fall out from the US and Israeli conflict with Iran has the potential to turn the cloud of uncertainty that's been hanging over the property market these last few months into a major storm.
And the market is heading into that storm with very high levels of stock for sale and buyers that are already being extremely cautious.
The first hints of how damaging it could be for the housing market should start to show up in the March figures. March is traditionally the busiest month of the year for the residential property market, before it starts its steady descent into winter.
This year it could be facing its biggest challenge since Covid reared its ugly head back in 2020, which could make for a very cool housing market indeed this winter, one that may be difficult to trump.
2 Comments
All the talk about inflation rising and talk from RBA about lifting rates will have the horses and children worried.
Lots of rentals and falling rents so FHBers feel no pressure or FOMO, safest route for them is to wait and see what happens.
IMHO the biggest risk to house prices in NZ now is the future of the US Equity markets, a fall in the value of Kiwi savers will make people readjust to the levels of debt they are prepared to take on to climb the ladder.
More unsold stock. Inflation charging. Rates turning north. Price erosion continuing. Less rent slaves from immigration. Negative crashflow building. Increasing job insecurity. Private specu capital overseas crashing. AI job destruction just starting. And fuel based mega inflation shock pending.
Is it time to stock up on pepto pills to the for the overleveraged burning specu squirts...?
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