Glut of listings hits 'buyers' market; inventory now equals over 1 year of sales (Update 1)

Realestate.co.nz has reported a surge in new property listings in March that means the inventory on the market is equal to more than a year's worth of sales. This 'glut' of supply meant the market was now even more favourable to buyers, Realestate.co.nz Chief Executive Alistair Helm said in releasing his March property report, which is available in full on Unconditional. (Adds comments from ASB economist Jane Turner downplaying the surge) There were 14,408 new listings added to realestate.co.nz in March, taking the total up for sale to 55,263 or 53 weeks worth of sales volume at current rates. That is up 54% from the 34.3 weeks of inventory on the market in December. “However sellers appear to be in denial, as the asking price for new property listings in March rose slightly and is now only 1% below the peak of the market back in October 2007," Helm said. "Vendors need to be asking themselves if their price expectations are realistic given the amount of unsold houses currently on the market. To secure a sale in this environment, sellers need to be flexible on the prices they are asking,” he said. Here is the full release from Realestate.co.nz below:

The high number of new property listings in March, coupled with static sales volumes, is adding to the glut of unsold houses. At current sales rates, it would now take more than one year to clear the available stock. The data was released today in the NZ Property Report, a monthly survey of market activity compiled by Realestate.co.nz, the country’s leading property listing site. According to Realestate.co.nz CEO, Alistair Helm, “14,408 new listings were added to the market in March. While this is down slightly from February, sales remain static and consequently the number of unsold houses has now grown to 55,623 nationwide. As a result, the inventory level of unsold houses, as measured by the number of weeks of sales necessary to clear properties on the market, has extended beyond the one year mark to 53 weeks. In December, the inventory level was 34.3 weeks, so that’s a 54% increase in three months. Indisputably the property market is even more favourable to buyers. “However sellers appear to be in denial, as the asking price for new property listings in March rose slightly and is now only 1% below the peak of the market back in October 2007. Vendors need to be asking themselves if their price expectations are realistic given the amount of unsold houses currently on the market. To secure a sale in this environment, sellers need to be flexible on the prices they are asking.” In addition, the report highlighted an urban-provincial divide with the stock of unsold houses in provincial New Zealand rising to 70.1 weeks of inventory, while the three major cities recorded inventory of 39.8 weeks.

The total number of house listings available for sale increased in March. However, listings are typically strong in February and March, and after removing seasonal affects the increase was much more muted. The number of new listings (seasonally adjusted), while rising, remain at a relatively low level (see chart below). As a result, the total inventory of house listings remains reasonably steady. RealEstate.co.nz has reported that the stock of housing is now equivalent to over one year worth of sales. However, this estimate appears to be over-stated (for example total listings are 55,600 which compares to annual housing turnover of 69,400 for the 12 months to February). Our own seasonally adjusted estimate for March puts the overall housing inventory at 11 months. For comparison, the long-term average for the Barfoot Thompson Auckland data is 8 months, which does suggest the nationwide listings are on the high side. The pick up in this measure represents weak housing demand and very low level of sales, rather than a strong surge in listings. The listings data provides an early guide on the housing market sentiment in March. Although the number of listings remains low, the number of sales is likely to be even weaker. The rise in new listings remains muted, suggesting there is little sign yet of a rush to sell off investment properties in response to proposed tax changes. The rise in total housing inventory pushes the balance in the housing market back towards a buyers’ market, and as a result we expect prices to remain subdued.