Early signs are emerging the glut of homes for sale that has dominated the housing market for the last 12 months may finally be moving back to a position where supply and demand are better balanced.
The much anticipated spring surge in sales finally materialised in October, with the Real Estate Institute of NZ recording 6681 residential sales for the month. That was up 10% compared to September, and up 20% compared to October last year.
Perhaps more importantly, two key indicators of the long-term movements in supply and demand have been showing signs the big oversupply of properties that has created a strong buyer's market, are starting to shrink.
The first is the overhang of unsold properties at the end of each month. While still at a relatively high level, it has been steadily declining for the last four months, from 27,727 at the end of June, to 23,347 at the end of October.
That's a decline of 16% over the last four months. While the overhang is still high - up 31% compared to October last year, at least it's now moving in a more promising direction. See the first graph below for the trend.
The second set of numbers that's looking promising is related to the first, and that's the number of properties being withdrawn from sale each month.
This peaked at 3981 in May and then steadily declined to 2580 in October. However, it still remains elevated. See the second graph below for the trend.
So two of the most important recent trends for picking the direction of the market have been fewer unsold properties at the end of each month, and fewer unsatisfied vendors taking down their for sale signs.
But hold the champagne, those signs are still very tentative and there is one set of figures that has the potential to disrupt those trends. That's the number of new listings coming on to the market.
According to Realestate.co.nz, new listings surged to 11,572 in October, up 21% compared to October last year. That pushed the total stock of properties advertised for sale on the website to a 10-year high.
Which means there will need to be particularly strong levels of sales in November and December for supply and demand to keep moving closer to being in balance.
Otherwise the market is likely to move even further in buyers' favour.
And there is only another month to go before the market shuts shop for the Christmas/new year break, which means crunch time draws nigh for both vendors and buyers to make decisions on a sale and purchase.
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