Barfoot & Thompson director discusses true health of housing market
Peter Thompson (pictured above), managing director of Barfoot & Thompson, challenges the typical focus on fluctuating house prices as the sole indicator of the housing market’s health.
Despite varying forecasts on the direction of house prices, with some predicting rises, Thompson pointed to the stabilisation of house prices as a significant positive indicator.
The national median price has hovered around $780,000 for the past two years, according to the NZ Real Estate Institute’s data, demonstrating a market that has found its equilibrium – a condition that breeds confidence among both sellers and buyers.
“I see that as a real positive in that it represents a market that has found its base and is starting to give confidence to vendors that they are not accepting ‘too little’ for their property and buyers that they are not paying ‘too much,’” Thompson said. “It provides the platform from which the market can continue to benefit from some of the more positive trends occurring.”
Significance of sales and listings volumes
The recovery in the number of homes sold last year highlighted another dimension of a healthy market. Sales rebounded to 72,000 homes in 2024, up from the lows of the previous years.
This recovery in sales, coupled with the highest number of listings at the start of the year in over a decade (5,094 properties), contradicts the notion that a high volume of listings suggests market inactivity.
Instead, it reflects a vibrant market offering extensive choices that enhance buyer engagement and overall transaction activity.
“What the higher number of homes for sale represent is buyer choice in terms of location, lifestyle, price, and size,” Thompson said. “It is an encouragement to buyers to view ‘what’s available’, adding to market activity.”
Future growth: Comprehensive housing market indicators
The stabilisation in house prices and the improvement in sales volumes set the stage for future market growth, supported by a diverse inventory that caters to varying buyer preferences.
Although the rate of new constructions might slow down in 2025, the steady issuance of building consents ensures a continuous expansion of the housing stock.
This suggests that market evaluation should transcend the simplistic comparison of current prices to historical peaks, considering instead a holistic view that includes demand, supply, interest rates, and general economic activity.
Thompson asserted that with a solid foundation of stable prices and rising sales volumes, combined with an enriched property offering and softening interest rates, the market is well-positioned for increased activity.
As the economy shows signs of growth, these factors collectively forecast a positive trajectory for the housing market.
“My position is the market has found its price base, sales activity is rising, the level of property reaching the market for sale (both in terms of new builds and from existing stock) is giving buyers the greatest choice they have had in more than a decade and interest rates are edging lower,” Thompson said.
“If the economy begins to grow, then the prospects for even greater activity are looking positive.”
Thompson's comments coincide with recent reports from QV and OneRoof-Valocity, which have documented an increase in national property values.
Read the opinion piece on the Westpac website.
