But future progress remains uncertain, says report
The New Zealand residential property market is showing signs of stabilising during the winter months, although it is still far too fragile to be called a recovery, according to a new report.
June residential property listings in Realestate.co.nz totalled 24,676 – its lowest level since February last year and after three consecutive months of decline. That means the total number of available homes for sale has returned to the level prior to the COVID-19 outbreak in 2019.
Interest.co.nz, in its Housing Market Activity Report for June 2023, said two things caused the recent decline in housing stock: the slight improvement in sales, with REINZ recording 5,629 sales in June, up 14.6% compared to June last year; but the one with the biggest impact was a drop in the number of properties being newly listed for sale each month, which has declined by 21.2% to 6,218 in June year-on-year.
“That means the number of sales recorded by the REINZ each month expressed as a percentage of the new listings received by Realestate.co.nz the previous month, has increased from 61% in June last year to 77% in June this year,” the report said. “Meanwhile, sales expressed as a percentage of total stock on the market at the end of the previous month has increased from 18% to 21% over the same period.”
A comparison between the asking prices and the selling prices can reveal what’s driving those trends.
REINZ data showed median selling price has grown by 2.3%, or $17,500, since the start of 2023 – from $762,500 in January to $780,000 in June, although it has been flat for the past three months.
The same period saw the average asking price for properties available for sale on Realestate.co.nz fall by 4.6%, or $40,698, from $882,386 in January to $841,688 last month.
The figures suggest that a reduction in asking prices has been a major driver of sales.
“All of the above figures sit well with the feedback interest.co.nz is currently receiving from the coalface of the residential property market,” the financial and economic news hub said.
“This is that the main driver of market activity is vendors who are becoming more realistic in their price expectations, whether they have a property that has already been on the market for some time or are bringing a new listing to the market. And that is stimulating sales.”
Those vendors who are unwilling to accept current pricing and are increasingly sitting on the sidelines, meanwhile, are what’s driving the decline in new listings.
“Another factor to consider when looking ahead to next spring, is that there is a significant amount of latency in the market from both buyers and vendors who have held off from making a sale or purchase,” the report said.
“The degree to which new listings come to market in spring and how well that matches up with demand from buyers will obviously have a big impact on how the market performs.”
In the current market, more than mortgage interest rates, it’s how well the economy performs during the next few months that’s a more important factor to consider when predicting market trends.
“Given current property prices even after allowing for recent price falls, buyers need [to] have a good measure of confidence in the economy and in their own employment prospects in particular, if they are to commit to the huge amount of debt that they need to take on to make a purchase,” Interest.co.nz said.
“And confidence and certainty are two things that are in short supply at the moment.”
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