By Greg Ninness
There are signs the slump in residential property sales volumes that has occurred over the last 18 months may be starting to bottom out.
Interest.co.nz’s latest quarterly analysis of residential property market activity shows that while sales are still running well below where they were 12 months ago, the rate of decline has slowed markedly.
In the 12 months to the end of March almost 73,000 residential properties were sold throughout the country, down almost 17% on the previous 12 months.
That trend was evident to a greater or lesser degree throughout the country, even in regions that were supposedly experiencing buoyant conditions such as Waikato, Bay of Plenty, Hawke's Bay, Manawatu and Wellington.
However the Auckland market was particularly hard hit, with sales in the region over the 12 months to the end of March down 24% compared to the previous 12 months.
However the rate of decline both nationally and in Auckland, has been steadily decreasing.
Nationally, the number of sales in the first quarter of this year was almost unchanged from the fourth quarter of last year, and was down just 2.9% compared to the first quarter of last year.
That was a big improvement from the second quarter of last year when sales were down 25% compared to the same quarter of 2016.
That trend is broadly evident throughout most of the country.
Even in Auckland the rate of decline has slowed substantially, with sales in the first quarter of this year down by 7.9% compared to the first quarter of last year.
That was also a big improvement on the second quarter of last year when sales were down 34% compared to a year earlier.
Those figures suggest the decline in sales that has been evident since late 2016 has probably bottomed out in much of the country and is close to bottoming out in Auckland.
But there is no sign of an upturn at this stage.
The market is still following seasonal trends and there are already signs that sales are declining again as the market heads into winter, so sales levels are likely to remain subdued over the next few months at least.
However even a stabilisation of sales at a lower level will be welcome news for the real estate industry, which has experienced a sharp drop in commission revenue as sales have declined.
Interest.co.nz estimates the real estate industry earned about $1.4 billion in gross residential sales commission in the 12 months to the end of March, which was down by $227 million (-14%) compared to the previous 12 months.
In the Auckland region the decline was even more savage, with the industry earning an estimated $565 million in gross commission from Auckland residential sales in the 12 months to March, down by almost $169 million (-23%) compared to the previous 12 months.
So although there is no sign of a return to the high life that the real estate industry was enjoying a couple of years ago, for now at least it appears that the haemorrhaging of commission revenue that occurred last year has been staunched, for the time being at least.
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