A huge surge in the number of homes on the market comes at the same time sales have plummeted.
Property website Realestate.co.nz had 26,301 residential dwellings available for sale at the end of May, up a whopping 76.7% compared to the end of May last year.
The number of homes available for sale was more than double what it was a year ago in many regions, with the biggest increases occurring in the Wellington region where stock levels were up by 188% compared to May last year, followed by the central North Island +165%, Hawke's Bay +148%, Wairarapa +143%, Bay of Plenty +143%, Manawatu/Whanganui +142%, Nelson & Bays +116% and Waikato +106%.
The chart below shows the number of homes available for sale in all regions at the end of May compared to the end of May last year.
Significantly, new listings across the entire country in May were up only 2.5% compared to May 2021, the second chart below shows new listings by region.
So the increase in stock levels is due almost entirely to a slowdown in sales.
According to the Real Estate Institute of New Zealand, there were 4860 residential properties sold in April this year, down 35% compared to April last year.
There are signs that the high number of properties on the market and low level of sales is starting to affect asking prices.
Average asking prices were lower in May than they were in April in 11 of Realestate.co.nz's 18 sales districts.
The biggest declines in average asking prices were in Waikato where they were down 15.5% in May compared to April, followed by Gisborne -9.2%, Hawke's Bay -5.9% and Southland -5.8%.
For potential buyers, the increase in stock levels and easing in asking prices is obviously good news.
And with so much stock to choose from they can afford to take their time and negotiate hard to get a good deal.
For vendors the market has become more difficult and they will need to pay particular attention to having their properties well presented and realistically priced to ensure a sale over the coming months.
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65 Comments
Wow, some of the numbers coming out in recent times are staggering! I commented a while ago that I didn't believe there was a "shortage" of housing, just a shortage of houses for sale after hearing people in the game comment "House prices will always go up as there is always a shortage of houses".
Looking around my neck of the woods lately there are a ton of houses on the market and many are not selling having been on the market in excess of 6 weeks. You could say we have an 'excess' of houses!
I've been suspicious about the so called housing shortage for a couple of years, particularly when borders closed and house prices rocketed up. This 'shortage' would be correctly described as an 'allocation issue'. With falling house prices I think we may see this allocation issue resolve itself.
Looking around my neck of the woods lately there are a ton of houses on the market and many are not selling having been on the market in excess of 6 weeks. You could say we have an 'excess' of houses!
Yes. Everyone's running for the exits. Question is: where are they going?
Strange the way some people think. Most of the sellers will buy something else, there is no "Excess" of houses. Numbers on the market are being compared to the market during Covid so not a fair comparison. I have been tracking the numbers for sale in Tauranga for about 3 years now, numbers for sale are only now back to what they were pre-Covid. A whole load of people now want to move because it was just a nightmare to do so during Covid. I'm sure a few speculators and the overleveraged are pulling the plug but the percentage would be small.
I've been loosely following, regional listings up from 1350 to 1450 in four weeks - 25 listings per week (I said 10 - 20p/w in a comment on here a few days ago, but checking the data, 25p/w). Many price drops, many past their availability date. Seems as though the jig is up in Wellington in particular. House prices and rentals are both dropping.
Every part of the country is different, but the stories are coming out now.
I've been tracking Christchurch listings for about 6 years. Listings are nowhere close to where they used to be 5 years ago. Listings are even less than in April 2020 when we were in lockdown!
What is more interesting is the nature of those listings. Most of them are for those crappy new build townhouses. There are hardly any unsold stand alone houses, or older units with garages and decent backyards. This is likely to get worse as the townhouse completions add to the stock on market due to all those who purchased them off the plan with the intention of profiting from an immediate resale (and no intention of occupying them), those buyers that can no longer get approved for finance, investors who can no longer afford a cashflow negative property due to higher interest rates, and those over leveraged developers who scaled up volumes dramatically thinking that the gravy train would continue forever.
I would be interested to see if its the same in other towns - are the unsold listings established or new build properties?
My guess on people moving to Christchurch over the past 2 years is that 2021 they realised they were officially "locked out" of the Auckland/Wellington property market and saw Christchurch as 1/2 to 2/3 the price whilst still being around a city and without moving country. Have you found similar views on people moving there?
Ashley Church used to roll out that ridiculous argument that if there's houses for sale there cannot be a shortage ....
... never could tell if he was deliberately bull sh*tting us , or if he actually believed it ... either way , you gotta larf at the sheer insanity of it ...
Houses for sale almost doubled, credit halved.
The laws of universal gravitation now applies to the NZ housing market.
When two objects interact, they apply forces to each other of equal magnitude and opposite direction or in other words what goes up must come down.
Just been listening to Real Estate mogal and Shart investor Barbara Corcoran.
The US market must be heading in another to ours based on what she said.
Demand is out stripping supply.
She advised people to not approach your buying a home as an investor but as a home buyer for your family.
She then said to trade up,trade up trade up.
She said that most middle class people have their wealth in their house and that helps in retirement.
Get in the game she said.
Thats my interpretation of what she said.
She owns a real estate company so its in her interest to say that.... The facts are that you can get 30 year mortgages over there and they were going for 2.5% last year and now they are up around 5.3%, while the demand is still there, credit is being restricted which is a good thing... also houses are far cheaper in the US than here aside from the expensive cities.
US is just starting to turn, much like our housing commentators, sounds like she is looking back not forward.
The real estate data rolling in for April and May shows that the U.S. housing market is softening. New home sales fell 19% to their lowest level since April 2020. Redfin reports 19% of home listings cut their price over the past month. Inventory is rising fast, while mortgage applications and existing home sales are also falling.
Source here.
The "Pump" is finished, and now the "Dump" begins.
Houses will continue transact for less as credit continue to tighten and become more expensive, leading to a spiral of negative leverage. The regional markets have not felt the shift yet as being proclaimed by the property companies in those locations. It is important to remember they are always approx six months behind Akl and Welly "trends".
That trend is "freefall".
What's playing out is a direct result of the excess QE the govt chose to do to cover the covid ''crisis.'' As most people are beginning to realise, covid was sensationalised by the media, over played our communist govt & well supported by their tertiary ''experts'' all at a huge expense. The cost of a home increased 40% over an 18 month period - madness on steroids.
To today: The artificial ''boom'' has to be lowered, somewhere near to reality (for wages etc) would be nice. It's never pleasant drifting out to sea when the 2-stroke wont start, but we need some balance to return to the country & the markets. The best bet in my opinion would be to remove the people who created it, but sadly, that option is not available this year. The second best bet is to sit tight & work hard (remember working?) & tough if out over the following 18 month period, of which we are already 6 months into. Life will go on. There is always hope. And the biggest hope of all is the JA & GR & co are banished to the wilderness where they can carry on achieving nothing at their own expense.
Perhaps the government needs study a little about risk management and diversity of investments..... much as i love our strategy of having an entire economy resting on one large export customer (ruled by a dictator) and the worlds most over-inflated housing market.
Just wish there was an alternative to these guys and 7-houses luxon.
Luxon ran a big corporate, he has put his money in housing and wants to protect his investment (and those of his mates) by getting into power and reinstating a housing boom.
(Also i note he wants to raise the higher tax bracket so he gets more take home pay even though he apparently doesnt know what he will spend the extra money)
He has no skin in the game - lives in a different world to his voters and is hoping to get in just because Labour fails badly enough.
Whereas NZ needs a leader and visionary - Rebalance the economy, drive efficiencies in public sector, proper climate policies, sort health and kids out.
I love the term, 'profitless boom'
https://www.vice.com/en/article/dypaev/rich-bankers-say-your-life-is-ab…
The lowest number of houses for sale across the country on trademe last year that I saw was 17,000....it's been sitting above 32,000 for the past 4 months, it won't actually show any more than that number, also down the side it used to show recent home sales now it throws out random sales from random months from last year, unknown if intentional but an observation nonetheless.
I track the TradeMe listings. In April 2020 there were 30,500 houses for sale NZ wide. Auckland is currently about 20% higher (12,434) than in April 2020 (10,165) when we were all in lockdown. Christchurch is still lower (2800) than April 2020 (3200), and in the areas I follow still about half the number of listings from 5 years ago (which is why property prices began falling 2017-2019).
"For vendors the market has become more difficult and they will need to pay particular attention to having their properties well presented and realistically priced to ensure a sale over the coming months."
Gone are the days when an old tired house sold within days of being listed, and at a good price too. As far as I can gather, its in the lowest quartile that a price decline is evident.
Winners of yesteryear are the losers this year. Or are they, just hunker down for a couple of years and see what happens.
The houses that manage to sell are down 10%, the ones that fetched an offer favorable to the vendor.
Mortgage pre-approval statistics would be a measure of market potential. Houses can only sell for what people are capable of paying. The crop of pre-approvals could be for amounts 30% lower than last year. Properties that fail to sell could be receiving offers much lower than the vendor's expectations, but these aren't measured in house price stats.
The Trademe Bot is busy today with
Method of sale change - Notification
Price Reduction Notification
Deadline sales in Turangi are well.... Dead.
Now listed with a double RV price by negotiation, oh the pain to come
https://www.trademe.co.nz/a/property/residential/sale/listing/356594797…
For 630k you can get a 3 bedroom house 30 mins to Melbourne CBD, 20 mins to Brisbane CBD, 10 mins to Perth CBD... cities with 2 million, 5 million odd people...
Or you can live 5 hours from any city in the middle of the country and get locked in during winter snowstorms and buy a house like that which in reality is worth about 150k max.
Its hardly a crash. Tauranga is 0% change for the last 3 months and still up 21.7% YoY so my pick of single digit gains for the year is still a possibility. Places like Auckland that is just way over priced will get hit hard, I'm not expecting the regions to get slammed, people are bailing out of Auckland and moving North and South.
Carlos this is just the start house price’s downturn, housing crash is a slow motion crash just takes longer but same result. Some clues for you to watch, rates raising inflation high building companies going insolvent, average house price’s getting lower more stock coming on market.
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