Expectation gap evident in regions, says realestate.co.nz
Average asking prices for residential dwellings listed on realestate.co.nz were up by a collective $12 billion in 2022, indicating optimism from vendors as interest rates started to rise.
Average asking prices have trended downwards over the last year, yet feedback from regional real estate agents indicates many vendors have not adjusted their expectations, the listings website said.
Data released by realestate.co.nz in February shows that nationwide, property sellers collectively asked for $125bn in 2022. Based on the average asking prices for properties listed for sale in each of the two years, last year's figure was $12bn (11%) higher than in 2021, the website said.
The total sum of average asking prices increased in almost all regions last year, it said. At over $19bn, the sum of average asking prices for residential dwellings listed in Canterbury was up by 102%. Properties listed in Nelson & Bays (33%), Coromandel (32%), Central North Island (25.6%), Northland (23.2%), Taranaki (21.2%), Waikato (21%) and West Coast (20.8%) each showed a rise in the total average asking price above 20%.
Auckland was the anomaly, where the sum of average asking prices for residential dwellings listed in 2022 ($54bn) was down 6.7% ($3.8bn) compared to 2021, realestate.co.nz said.
Realestate.co.nz CEO Sarah Wood (pictured above) acknowledged that significant economic factors, such as interest rate rises and high inflation, had impacted borrowing power and serviceability, prompting the market to move into a new cycle.
Strong increases in the total average asking price in many regions over 2022, together with feedback from real estate agents, suggested a gap between vendor expectations and the current market, she said.
“Average asking prices have trended downwards over the last 12 months, but we are hearing from agents that many sellers are still expecting prices above where the market is in their region,” Wood said.
The latest CoreLogic House Price Index shows property values fell 0.3% in January, marking the 10th month of decline. Residential property values are down 7.2% year-on-year, CoreLogic figures show, which it said was the biggest 12-month decline since May 2009 (-7.9%).
Increase in property price reductions over 2022
Wood said changing economic conditions had resulted in a “shift in conversations” about property last year.
“Up to the end of 2021, when demand exceeded supply around the country, everyone was lamenting 'crazy property prices' and asking when they would stop rising,” Wood said. “Last year, we saw the conversation change. We were still talking about 'crazy property prices', except it flipped to how much further property prices might continue to fall.”
Real estate listings data for 2022 indicated some receptivity from vendors, with a price reduction on 41% of residential dwelling listings – a significant increase from 10% of listing prices reduced in 2021, realestate.co.nz said.
‘This reflects the state of the current market and the requirement for vendors to price their property based on what the market is willing to pay,” Wood said.
January properties for sale down 16% year-on-year
According to current realestate.co.nz data, there were 6,646 residential dwellings listed in January.
Compared to January 2022 (7,912 listings), listings in January 2023 were down 16% year-on-year, and down 21% from January 2021 (8,048 listings).
Wood told NZ Adviser that the declining listing numbers were likely a reflection of vendors’ response to recent economic activity and a normalising market after a couple of years of heightened activity.
“Listings have certainly softened as we enter 2023. This is likely due to recent uncertainty in the economy, rising interest rates and the upcoming election,” Wood said.
These factors impact the willingness of Kiwi homeowners to list their property, and how much they want for it, she said.
“If we look at the data over a longer term, it also appears that in 2022 the market has started to correct itself ever since prices peaked in January 2022,” Wood said. “[This year] 2023 may be the year that we see the market settle when compared to the unsustainable activity of the last two years.”
The February REINZ Tony Alexander Survey showed fear of missing out remained absent from the New Zealand property market, with a net 59% of real estate agents reporting that prices were falling in their region.
Do you have mortgage clients who are finding it difficult to sell their property in the current market, and/or who are reluctant to list it for sale? Share your thoughts in the comments section below
