Vendors taking their properties off the market helped push down the volume of unsold housing stock in May

There is both good and bad news in the latest housing market data.

The good news is that the huge overhang of unsold properties on the market shrank slightly in May.

The bad news is that much of the decline was caused by a sharp increase in the number of unsatisfied vendors removing their properties from sale.

The overhang is the number of residential properties that remain unsold after they have been on the market for more than a month. This number has grown hugely over the last few years, mainly due to many vendors having unrealistic price expectations.

However, the latest figures show the overhang declined slightly in May. Interest.co.nz estimates the overhang hit an 11 year high of 28,200 properties in April, and then dropped to 26,600 in May. That's a decline of 5.7% for the month.

The drop is likely at least partly due to seasonal factors, with the overhang usually declining over the winter months as fewer properties come to market.

However. last month another factor was also at play. There was a big increase in the number of properties being taken off the market.

These are referred to as dropouts, and they include properties formally delisted from sale, and those that may still be technically for sale, but are no longer being actively marketed.

Many are properties which may still have a for sale sign on the fence but they are not being shown at open homes and are no longer being advertised. Effectively their agents have all but given up on them.

Interest.co.nz estimates the number of dropouts ballooned from 3200 in April to 4200 in May, up 31% for the month and up 9.7% compared to May last year.

That helped to push down the size of the overhang in May month-on-month. However, it was still up 6.8% compared to May last year, and up 11.0% compared to May 2024.

So prospective buyers need not worry about a lack of choice. In the currently sluggish market they still have the upper hand.

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