This year may be shaping up as the mother of all buyers' markets for residential property.
There are two sets of figures pointing to the market being particularly weak at the start of 2025.
The first is the overhang of unsold stock at the end of 2024.
The overhang is the number of properties listed for sale at the start of a month, plus new listings received during the month, less the number of properties sold during the month.
It represents the number of properties unsold at the end of each month either still to be sold or that are withdrawn from the market.
Interest.co.nz estimates there was an overhang of 28,466 residential properties at the end of December last year, compared to 5518 sales reported by the Real Estate Institute of New Zealand (REINZ) for the same month.
December's overhang was 24.5% higher than it was in December 2023, and the highest it has been for any month of the year since May 2015.
However, in May 2015 the REINZ reported 7952 sales, 44.1% higher than the 5518 sales reported in December last year, so the market was much better placed to cope with the high overhang of properties back then.
Also by way of comparison, the overhang in December 2019, just before the Covid pandemic took hold, was 15,506 properties, meaning it has increased by 83.6% since then.
And of course a big overhang of unsold properties works in buyers' favour, ensuring they have plenty of choice.
The second set of data suggesting the market remains weak as it heads into 2025 is the high number of properties being withdrawn from sale.
Interest.co.nz estimates 3755 residential properties were withdrawn from sale in December 2024, up 43.5% compared to December 2023.
It is estimated that in the whole of 2024, 33,368 properties were withdrawn from sale, up 24.3% from 2023.
Properties can be withdrawn from sale for many reasons, but the most likely reason is vendors could not achieve the price they were hoping for and were not prepared to meet the market.
That in turn suggests buyers remain cautious on price and are prepared walk away from a deal if the vendor is being, in their view, unrealistic on price.
So 2025 is shaping up as an interesting year for residential real estate, but it's likely buyers will still have the whip hand and will continue to negotiate hard on price.
Their reasoning is probably something along the lines of there's plenty more fish in the sea, if they believe a property is over priced.
Although the properties withdrawn from sale have been taken off the market, they represent a latent supply of properties for sale ready to come back on to the market. That's because the reasons their owners wanted to sell probably haven't changed much.
Those vendors probably still want to sell, it's just a question of when, and what might force them to meet the market.
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People aren't subscribed because they can't afford it, that is obvious. I suspect most people will just stop commenting (maybe for the best), and as others have suggested, ad revenue will likely drop more than that additional 27 cents per day. At least you'll probably get rid of most of those pesky "DGM's" and the "sky is not falling because of Trump" types.
Many comments are good quality reflecting the real world so iT would be a shame and loss if payment to comment loses those insights, understand the cost pressures and advertising revenue which much print media are discovering is a failed business model, if non biased and truthful investigative and factualy based reporting results its just possible print media will survive.
People that accurate predicted that many buyers who rushed in to buy back in 2021 and were paying too much were behaving like fools and could well come to regret that decision. And anyone who thinks home affordability might improve in the future = doom and gloom (merchant). Because cheaper housing and improved prosperity for future generations is a complete nightmare scenario.
The true DGM are those who constantly name call other people DGM. It’s like the guy pointing out the spec in another’s eye while not seeing the log in his own. And as much as one says hey you’ve got a log in your eye they will say ‘it’s impossible for you to ever be correct because your views are negative and not excessively optimistic’ (even though they may be realistic and turn out to be true). I’ve found people living in denial the last few years are the most likely to call others DGMs. ‘I don’t have a log in my eye even though I can’t see out one eye and I’m in considerable pain - it is impossible that you might be correct about this or anything’
With more interest rate cuts coming and short term mortgage rates set to drop below 5%, maybe the balance might even out. Do potential vendors wait and see how low mortgage rates go before selling, or do lower mortgage rates relieve the pressure to sell?
ANZ are forecasting a 6.0% rise in house prices this year. Might we see the return of FOMO !!
Not a chance of FOMO. OCR will need to be around the 1.0% mark to move prices north of current highs.
IMO, the only way to start FOMO, is if the Government opens NZ property market to the world. With the low NZ$, this would make our market attractive to off shore investors.
If we didn't have Winston First in the coalition this would have been happening this whole parliamentary term, with an additional 15% of the sale price going straight to the government's coffers.
Of course, this additional demand for the NZD would have also kept the NZD a bit higher, leading to lower imported inflation..
Are fewer homes going to auction this year? I checked out Greg's articles from the same period last year and am keen to hear a summary of the situation this year. Seems like a slow start (I don't mean you, Greg).
Jan 27 2024:
https://www.interest.co.nz/property/126082/overall-sales-rate-has-been-…
Jan 20 2024:
https://www.interest.co.nz/property/125985/auction-numbers-increased-la…
As a prospective buyer (upgrading home) I tend to agree.
Fundamentally, it's frustrating dealing with 'incalcitrant' vendors. The property 'owes them' $X and they don't want to budge.
For example, we've seen a place where if we could it for its listed CV value, we would more than gladly make the purchase. But the vendor is sitting about $150k over CV and won't budge, so the property continues to sit.
Obviously the vendor is free to accept or reject an offer as they see fit ... but it's not like we are being greedy and saying we want 10% over CV for our place and 10% under for theirs (appreciate we'd have to sell first).
Couldn't agree more,
Curious DT, I read your posts frequently and we appear to have very similar situations, both business owners, relatively high household incomes for our age range (35ish) and large deposits, more than enough to comfortably buy a nice property or two. (Sold my last house in 2018)
Do you find you have constant pressure piled on from your family or friends to join the misery?
I said to some family members I'd keep a lazy purchasing eye on property this year even though I believe it will depreciate further after purchase, but now I'm just thinking of pushing all of our cash over to a managed fund for a while. They think I'm "nuts", because I'm not playing ball.
Of course as always, evidence free anecdotal bullshit is the primary reasoning.
The funny thing is, people feel sorry for you if you're "not on the ladder" even if you could buy their dog box with change left over. I don't think the landlord likes us for this very reason, always makes comments about why we have a Tesla in the driveway but haven't purchased a house. (It's a company car and the fuel savings pay for it many times over compared to the previous S4)
I said to my wife last night, bugger this, I refuse, let's just go with a managed fund and continue renting even though we are also looking to have our second child. (Son is nearly 2 and we need 4 bedrooms, one for my office and one for the second child)
We are saving a lot of cash per month and rent is cheap without the stress our friends are dealing with. If we have to move due to some twitchy owner, so be it.
Another year or two of savings, no debt and property price destruction is fine by me.
Does sound like we are in similar positions age/stage wise, however in case it wasn't clear from my post(s) we already own a house.
Purchased in 2019,. Timing wise we were just lucky to get in before prices ramped up post-Covid (if I recall, there were some brief mentions of a strange illness in China the day we signed the paperwork!). In hindsight wish we had bought a bigger place at the time as I'd have zero interest in property searching if we had even one extra room on the house and a bit more outdoor space for the dog and kid, but then again in hindsight I wish I had bought Nvidia shares when some colleague was shilling them to me several years ago!
So in terms of pressure, it's not the same situation as you (as you presumably had a property, sold it, and are now renting).
I'm also lucky insomuch that my parents aren't big property enthusiasts. They actually own a mix of commercial and residential property but it was all purchased yonks ago, none of it is rented out (it's used for family or business purposes) and they instilled into me from a young age that there are alternatives to property - such as shares, developing monetisable skills for a business, even crypto was a family dinnertime topic relatively early in the piece.
My wife's family is a bit different as her parents are very much of the view you always need to be looking to 'leverage', or 'add value' and that property is a one way bet and the be-all and end-all of investing and building wealth (even though they have managed to do rather poorly on some previous purchases). We are wary not to be too boastful of our ultimately good financial position (especially as none of the other family members of similar age to us are doing that well) but the in-laws have a sense we do alright, so tend to ask why we aren't looking at acquiring IPs etc. I just smile and nod, they are good people just a product of their generation, upbringing and network of friends who are all big into property investing too.
We are in the same second child position (just found out not too long ago, was a little unplanned tbh) and that is spurring the need to look at alternative options.
My fundamental whinge at the moment is it is ever so frustrating seeing a variety of properties which - if the vendors would be even 10-15% more realistic - would be a perfect fit and a modest step-up in terms of debt but where that step-up yields a commensurate in amenity. The problem is vendors don't seem willing to meet the market.
I'm surprised more FHB haven't cottoned on to this TBH. Many are paying double or more in home ownership costs than rent but they don't seem to realise their equity is not increasing. Many are on higher interest rates as less than 20% deposit and surprised paying an extra $100pw doesn't get them from 10% equity to 20% equity in a year. How long are FHB going to keep propping up the market when they realise the "dream" is not quite that and the fundamentals of home ownership being the path to financial freedom have changed.
It may also be that people can rent in a nicer/more convenient suburb than they can afford to buy in which makes quality of life better while they continue saving for wherever it is they want to invest their money in. With the tide turning to more rental supply, along with flat house prices it should also be a lot less likely that tenants are moved on because owners are selling for capital gains.
Much of the churn in NZ property is for speculative profit taking, on which is needed FOMO from those they sell to, to keep the cycle going.
This Churn transaction is costly representing approx. 6% of the property value, made up of commission, legal, valuation, moving cists etc.
Just by reducing unneeded churn, a saving is made, which further can reduce prices overall.
Thats silly Billy.
Any old Goat worth their Grifting salt, knows that NZ home prices are headed back to around 2015 valuations, or lower. This is almost 100% Guaranteed.
Ridiculously High current prices, massive holding/maintenance/interest costs, will see this current 4-year housing crash, play out further into 2027 and 2028.
I think the situation may be more significant than Greg's figures suggest, especially in Auckland. The supply of new houses isn't reflected in the listings - as developers list one townhouse when they have 10 to sell.
Wellington has less of this issue, although appetite to buy homes has clearly fallen off a cliff. But supply there slowed rapidly in the last few years.
A further element is that those homes that sold 'off the plans' during the building boom will be close to completion around now. So those may be purchasers will be either quitting rentals, in the case of FHBers, or selling homes for existing home owners. A lot of rentals may come to the market which will be a potential issue for landlords looking for a tenant.
If you are flying along in New Zealand now. There is a quiet fear that your plane could run out of gas (you or your partner lose your income)at any time. It costs less to rent a better plane than you can afford to buy. There is also the option to jump out anytime, deploy your parachute, and float down to land in Australia. If you own the plane you are handcuffed to your seat.
be very unlikely to see any FOMO in NZ general property markets both RE + CRE this decade .. we only had that during crazy COVID years as rates went to insanely low "Once in a lifetime levels" which created massive distortion of reality we are still living with as every tradie ,investor,retailer wanted top dollar and blamed COVID bah bah .. every homeowner now wants million+ for their shitbox as costs to replace to new standards cost well above .. basically we have much pain to come as NZ moves through its depression.. lower NZD will only make it worse for the majority so lower Interest rates won't fix it .. only deregs -investment into primary industries we see the best paying jobs in a growing primary industry then we will be on the right pathway ..if we continue to crush and stop primary then watch as the depression crushes average kiwis
YOU CAN'T GROW A NATION THROUGH DEBT WE HAVE TRIED ..AND NOW WE MUST REAP THAT STUPIDITY OF BIDDING UP HOUSING
Like the summer wine, the last of the cheap covid loans are rolling off exposing the over leveraged to financial reality.
Still reckon its gonna take the banks to actually start liquidating the over leveraged to make a sizable dent on price. People will start eating cockroaches before the take the capital loss. Or spending to much time on here thinking 20 ponzi pumping posts a day will turn the market. It wont. Gonna be really interesting how many refuse to pay the 27 per day cents to keep up their barrage of hopium.
Spruikers and home hoarders know, in the pit of their sickened stomachs, that the road to untold riches in the NZ housing market is up. The once in 100 year crash, is but halfway done.
While the jig is well and truly done and dusted, some spruikers are still doing the awkward, Jed Clampit like, back and forward arm-dance-jig.....like the dying throws of the last band tune, on the Titanic.
The now endangered, "greater buying fool" has wisened up and simply won't pay moonbeams for your pile of sticks and dirt. Spruikers are slow, to get the now well-known memo :)
The NZ housing Ponzi has well and truly popped and as many more people become aware of it, this is ensuring its terminal decline, finishes its nose first impact, in the bush far below.
Surely it would be a good thing if the property market stayed subdued for many years to come. I am looking at figures from the 2021 and 2024 Demographia annual housing affordability study. They measure this by taking the median income to median value and cover 92 cities. In 2021, Auckland's ratio was 11.20, while for 2024, it was 8.20. That still makes it severely unaffordable but moving in the right direction. I would like to see it fall to around a ratio of 5 which would put it in line with cities such as Manchester in the UK, Ottowa in Canada and Washington DC in the US.
I don't know how long that might take, but it would give my grandchildren and their peers a better chance of being able to stay in NZ.
Exactly this - but people have to much financially and emotionally wrapped up in prices never falling that returning to a reality where prosperity might exist in the country for younger generations is too painful for many to face - even though it is the ethically/morally correct position to take.
When we finally move past the greed is good mentally then we might be able to start putting things right and starting again and making NZ a great place to settle down, but a house and raise some kids - the number of people leaving show that it is not that place right now - it’s the polar opposite if you are a FHB.
Depends if you want oranges but the vast majority are lemons. Example majorityvof buyers want 3brm freehold section with a bit of dirt and a garage. But if the majority of properties on the market are two bedroom two storied shit boxes with no parking then you aint going to sell them. There are only so many young so called proffessionals that dont have kids going to work on a ebike. Another example put a 3brm on the market last month had over 40 veiwings 3 offers accepted an offer for full asking price. Over 440 people had it on watchlist on TM the agent still getting ph calls for a veiwing. Young single guy buying it just like the other one I have an offer on the tenant a single mother buying it 4 bedroom single garage. She was the tenant so no RE fees and I knocked the market price back 35k. She was a great tenant. Those are real examples not heresay
You sound like a realistic vendor Colin, who understands the value of a quick and easy sale. Most, if approached privately wouldn't be willing to knock back the price with reference to saving REA fees, as they think they'd get a higher offer going via REA which would nullify the fees (tell emm he;s dreamin' daal).
I suppose so but i always buy in the no collar areas. That usually need work in painting tidying up etc etc. Alot of FHB have high expectations so leverage themselves to the max for the 4brm brand new build with ensuite etc etc. But i am happy in that two new FHB are buying a nice warm dry family home. Allows me to build a new build without going to banks and look at another purchase.
The best time to buy isn’t always yesterday even though this has been the FOMO mantra being promoted on this site and in general circulation by vested interests.
Good things do come to those who wait - even though it is the opposite of the ‘be quick’ mantra that tries to cause fear FOMO among buyers.
Deflation is kryptonite to western central bankers because we are living beyond our means - we would all default far too quickly with even a sniff of deflation - hence the way over the top response in 2020 when deflation looked possible. Ie we didn’t even have recorded deflation and CBs/governments went completely bonkers and caused a huge amount of inflation.
I think they could do that again but if they do rates could spike even higher this time - like up above 10%.
If I were Orr I wouldn’t be dropping the OCR next month - but equally I wouldn’t have dropped it anything like he did in 2020 which have caused the property market to go crazy, then high inflation, then falling house prices, unaffordable mortgages, expensive groceries and rates and bills. If they didn’t drop so far in 2020 we wouldn’t have had this pain we’ve had 2022-2024.
We could also avoid future pain by not dropping too low now as well - even though people will complain that dropping rates now May temporarily ease their pain (but these are generally people who are trying to live beyond their means eg too much mortgage debt relative to their incomes or buying up multiple properties)
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