Housing market watchers must have breathed a collective sigh of relief when the Real Estate Institute of New Zealand released its March sales figures, not because the figures were particularly good, which they weren't, but because they weren't particularly bad either.
What they showed was that the market ended up in March more or less back where it was in March last year. (You can read more about that here).
With everyone keeping an eye on the dark clouds of uncertainty gathering on the economic horizon, there was relief that the market didn't crash.
Equally, 2026 was supposed to be the year for a much-hyped economic recovery, and hopes of that, and its expected flow through to the housing market, also appear dashed.
March was a month in which everyone, buyers, sellers and those who clip the tickets on the way through, ended up holding their breath to see what happens next.
So where could things go from here?
It's important to remember that even during times of boom or bust, the housing market broadly follows a seasonal pattern, and March is traditionally the busiest month of the year for residential real estate. This March was no different in that regard.
So even without the current economic turmoil, it would be reasonable to expect sales numbers to start declining in April. We are already seeing that in the auction rooms, with fewer properties being auctioned each week compared to March.
However, with everyone holding their breath to see what happens next, the danger is not so much of a market crash, although that remains a possibility, but of a market that stalls. And that could lead to a chillier winter than usual as sales and prices slowly decline.
There are a couple of things to keep an eye on as the housing market heads into the cooler months.
Firstly, the amount of stock for sale remains extremely high.
Stock levels are usually high at this time of year. But property website Realestate.co.nz had 37,638 residential properties available for sale at the end of March, the most stock the website has had available for sale in any month in more than a decade.
So it continues to be a buyer's market.
The other figure to watch is the overhang of unsold properties each month.
The overhang is the number of properties that remain unsold after they have been on the market for at least a month. Interest.co.nz estimates there were around 25,600 such properties at the end of March. That's the highest number in more than 10 years, and was more than three times as many properties as were actually sold in March.
The most likely reason properties sit on the market unsold is their owners have unrealistic price expectations, while at the same time, potential buyers are being spoiled for choice and remain super cautious on price. This is not a good combination.
After the marketing campaigns for these properties have run their course without success, potential buyers are no longer looking at them and eventually their agents are no longer prepared to put time and effort into running open homes. So the properties become wallflowers at the real estate ball.
The owners of these properties are like a lazy cat that wants to catch a bird but can't be bothered going hunting. So it sits in the sun with its mouth open hoping a bird will just fly into it.
Unless owners are prepared to meet the market, they have about as much chance of selling their property as that cat does of catching a bird.
So where does this leave the housing market as it heads towards the winter slump?
Well, to use yet another metaphor, if the market was a plane trip you wouldn't be seeing those little oxygen masks drop down from the ceiling just yet. But it would probably pay to fasten your seatbelt because things might be about to get a bit bumpy.
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19 Comments
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TA calling flat, main banks calling FALLS
For City Realty... the plane has crashed.
So we are about to enter the second half of the "lost decade" for NZ property.
- Or will it be two last decades?
There is no savior coming. Increased holding costs at all ends and falling rents.
For the forever hopeful and mercurial Landlords, chasing the free capital gains money tree (like a murderous cat amongst pigeons), they are actually being painfully basted in hot oil while being spit roasted, at both ends.
NZ society weeps for them. :)
They are the bedeviled bag holder, with no suitable exit ripcord, apart from massive costs, forever out of pocket topups and capital losses.
Sounds like a wonderful time to be a LL......
Gonna be a tough period for sure. We are shifting from the denial and fear stage towards capitulation and return to mean phases on the housing bubble models.
Tax avoiding specu leverage debtors.... time to burn. The specu wax holding your wings together are melting.
Specarus...
Useller unrealistic price expectations and buyer caution - this is not a good combination...... I take the inference in that as probable reduction in house values as not a good thing. And that I disagree with.
If we were talking lounge suites, fridges cars, the discretionary part of the economy, such a mix is not a good thing for businesses bottom line. But doesn't impact significantly on the basic provision of shelter.
But when applied to the basic needs of shelter, I think it is a good and desirable situation. And a move away from all eyes focused on house values as an indicator of the economy wellbeing with greater focus on the productive elements of the economy, a much needed shift.
Yes, for some, it will be a (very) painful shift. Lowered or negative equity, eats into discretionary spending capacity. The idea of living within one's means for many, I think, is an anachronistic concept applied to the ancient time of 1920s to 1970s - shun debt. If you can't pay cash don't buy.
In my opinion, a great deal of responsibility for where we find ourselves now lies with the banking sector. It is those players that have made it progressively easier to access credit. And for a significant period at least, bank lending staff were well incentivised to sell lending.
Personally, I think there is a good argument for the banks to take a bit of a haircut on the amount of debt advanced. Like how the mortgage relief court worked in the 1930s.
Would be great if we moved away from giving such reverence to bank executives and upended their self-serving incentive structures.
The issue is the small amount of actual bank capital extended on each mortgage.
It's only a few % of the entire book. Any serious write offs say 10% of book would wipe out the entire capital of the banks.
It's also why, perhaps the banks are more willing to change people to interest only etc etc, if they start forced sales it will devalue the entire book and then they will have to capital raise to meet RBNZ requirements
Probably Nothing
I think this is also why they get so vocal about their interest rate "predictions".
Well said. Banking sector and successive govts that did nothing, right back to seven houses Helen.
Today's mess shows why a universal land tax is necessary.
Looks like I'm delaying buying for an other 12/18 months.
If you see something you like offer what makes sense.
Agree, sometimes you can see something in a property (Subdivision, ability to run stock etc etc) that allows you to perceive a different value proposition then the seller). This applies more to LSB etc and perhaps large land blocks then trad houses.
The days of hold for Capital gain have turned into holding with growing capital losses.
Until we see sustained price rises Investors are going to incredibly yield focused
Many investment entry points that make sense are deep in the "wasting everyone's time" price level offers.
Yield hasn't stacked for ages, and price matched to debt to income balance requires a significant price drop to work. So capital losses irlt is
Bombs away...
Yes and that would only be at old 2012 to 2015 prices. I get the strong feeling that these lower values, are coming back into fashion, later on in the late 2020's.......
I haven't been very lucky with that: I'm looking at 1.3/1.4M houses, which to me are worth ~100K less than listed given the market, yet sellers stick to their prices. They used to be withdrawn from sale after 4 to 6 months but not anymore, they're just staying there.
Capitulation/aguish is the end phase of this crash, it is yet to show, yet it is just matter of time. Perhaps a long time, in illiquid markets, such is property and long banking forbearance measures.
Banks have many thousands of staggering, walking dead customers......
2027 2028 the bottom, of one stinky poo home market.
it depends on the property I will pay 500k over current valuation if I believe I could make another 500k over that with my eyes shut...
some people sell not even knowing you can subdivide inside current land use rules with minimum spend and no major RMA issues.
only really applies to large land blocks and understanding the local rules. in general we are talking multi million $ size deals.
It's interesting and intriguing looking at historical aerial photography of different cities to see the changes over time in this regard.
Very easy to see the trend of large and less land blocks slowly, decade-by-decade, be cut into smaller and smaller slices with more and more housing. Was always an easy way to fund retirement or get an income stream coming in then sell to double up again. Intriguing I say as some areas are still the same such as many state housing areas from the 1950's which are on what is now prime land, so intriguing to see who has and hasn't succumbed to intensification vs resisted and kept a nice block.
If anyone hasn't had a look at their city then I'd recommend doing so as it is fascinating to see the changes over the years, and delve into the hisory of how it became what it is today.
I settled on a house in a North Canterbury town a few weeks ago. It came on the market a week before Christmas: I viewed & agreed the asking price within a couple of days (with a due diligence clause).
I'd been looking in the area ~6 months, missed out on a few. Comparable prices noticeably increased ~5-10% over that period, they're flat this year. I paid ~95% of current RV which was IMO ~$100k less than comparable ones I missed out on which were in less desirable areas with smaller sections (RV can vary considerably from market value & agents opinions, need to take time to assess yourself).
Congrats. Hopefully the travel cost to get around isn't too much of a sting currently. However, it;s a lovely area, and being that close to Waipara and some of the lovely drops it produces could be worse :-)
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