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.
9 Comments
There is without a shadow of doubt, a massive overhang and ship shattering iceberg of unsold properties.
These "wanting to sell" at massive housing ponzi dream profits, go in and out of the market, onoffonoffon off, see it everywhere and often.
Stupid thing is, in waiting for the dusty sherrifs badge phoenix, to rise from the NZ property crash ashes, the crash just deepens further and further.....
Its dumb and dumber sellers to the left of me and ponzi pretenders to the right! Seller stupidity galore!
Best price is today..... sellers beee quuuick!
Exit prices wiĺl be less and lesser come 2027 2028 2029. Guaranteed!
Guaranteed? There you go again, predicting the future with such accuracy.
So, they all decided they didn't want to sell it anyway?
or was it all the Wasting every one's time level offers?
Was just looking at this post on the 'Kiwi First Home Buyers' Facebook group:
"Hey everyone,
We bought our property in South Auckland about 2 years ago for around $940,000. A recent Velocity valuation has it at about $770,000, so we’re now considering selling as we’re struggling to keep up with the mortgage and would likely be selling at a loss.
If anyone has been through something similar, I’d really appreciate advice on good real estate agents, typical selling costs (lawyers, marketing, etc.), and whether banks charge break fees or penalties in these cases. Also, if anyone has sold directly (without an agent), I’d really love to hear how that worked for you."
A few similar people in the comments. So per the above, even people who purchased circa 2024 are feeling the pain - let alone those who purchased at the peak in 2021!
Anyone who thinks green shoots are just around the corner are dreaming (in my view). This market is going to be soggy for a few more years yet.
No need to be quick - as that old wise saying goes 'good things come to those who wait'. Not 'good things come to those who rush in with maximum leverage during a period of market and society wide insanity (ie the COVID period and subsequent years)'.
Even Tony Alexander is calling for investors to hold onto their hats and fix longer at the higher rates on offer. That brings more pressure (downwards) as speculords cannot just put up the rent due to the excessive competition available from houses that cant be offloaded at a profit. All are pressure downwards for those that must sell. Meanwhile council rates and insurance are up.
Yip and if prices are flat/falling, then investors have no new equity to draw on to buy more properties and to increase the demand side of the supply/demand balance. Something that was a significant driver in the price rises we saw in the 2010's (ie prices went up significantly, which increased investor equity, which allowed them to buy more property, which caused prices to go up....and created a self perpetuating feedback loop - something that is now dead, and could potentially reverse itself if enough investors all try to vacate the market and move the capital to other investments that may actually provide future positive returns).
Indeed. Something like the Top land tax, or the Labour cap gain tax. Either could boost the specu charge to the exits. But who will buy
Speculation play book was all about tax avoidance. Let them eat cake... and pay tax.
🍿
The Gecko and few here, predicted the biggest NZ housing crash in decades, during 2021 and 2022.
100% right and we are not done to the bottom yet.
You can take the Geckos Guarantee and frame it!
Summer selling season was a flop. Why....? Simple....price. Vendors love "the market" when prices are rising and its all pass the bollie darling. When its in decline, they refuse to accept the market. The real question is whether the future is more decline, or some miricale recovery...
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