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Subdued market amid economic challenges

Subdued market amid economic challenges

Despite properties selling more quickly, increased stock levels and more listings, sales dropped 17.3 per cent last month from 6,721 in March to 5,559, the latest REINZ data shows, writes Sally Lindsay.

By: Sally Lindsay

15 May 2024

However, that was a rise of 25.3 per cent year-on-year, from 4,438 in April last year to 5,559 in the same month this year.

All but one region had more year-on-year sales, the exception being the West Coast, where sales dropped 5.3 per cent compared with April last year.

Sales lifted in 15 of the 16 regions, compared with April last year. Ten of those regions had increases of more than 20 per cent, with Marlborough at 45.8 per cent, the highest year-on-year lift in sales.

Westpac senior economist Satish Ranchhod says while there has been a notable pickup in turnover recently, with sales running at about 6,000 per month, that reflects a surge in new listings in recent months, which has provided more options for buyers. But even with the increase in sales, the stock of unsold homes on the market has built up to its highest level since 2015.

Prices rise

REINZ figures show the national median sale price increased 1.3 per cent year-on-year, from $780,000 to $790,000, and dropped 1.3 per cent compared with March, from $800,000 to $790,000. For NZ, excluding Auckland, the median price of $700,000 was the same as April last year; month-on-month it declined 1.7 per cent, from $712,000 to $700,000. The median national sale price has now increased year-on-year for the third consecutive month.

REINZ chief executive Jen Baird says there are vendors who will need to sell and don’t want to wait, but theywill need to set realistic expectations on price and time needed.

On the median price for NZ, excluding Auckland, she says: “This suggests that, with more properties to choose from, some buyers have less competition from other buyers, and some are more comfortable taking a stronger approach to negotiation.”

Listings up

Thirteen of 15 regions had year-on-year increases in listings, with nine recording rises of more than 25 per cent. Wellington had the biggest increase (up 318 listings) or 69 per cent year-on-year, followed by Otago (up 107) or 55.2 per cent; Marlborough (up 35) or 46.1 per cent; and Auckland (up 1,034) or 41.1 per cent. National stock levels also increased year-on-year, with 18.1 per cent more available properties for sale in April this year.

Days to sell

Nationally, median days to sell declined by three days, from 46 to 43 days, compared with a year ago.

For NZ, excluding Auckland, median days to sell dropped by seven days year-on-year, from 48 to 41 days. In 13 of 16 regions, median days to sell were lower compared with April last year.

The biggest drops were in Tasman (down 29 days), Marlborough (down 18 days), Northland (down 17 days),and Wellington (down 11 days). In contrast, Auckland had the highest days to sell since 2001, Manawatu-Whanganui since 2015, and the West Coast since 2019.

House Price Index

The House Price Index (HPI) stood at 3,629, down 0.8 per cent compared to the previous month and up 2.8per cent for the same period last year.

The average annual growth in the NZ HPI over the past five years has been 5.8 per cent per annum, and it’s at 15.1 per cent below the peak of the market in 2021.

Facing the headwinds

While the April data shows more activity in the housing market, with year-on-year increases in sales, listings, stock levels and median prices, it’s clear that economic factors are creating headwinds, Baird says. “The likelihood of interest rates staying at these elevated levels for a while, and more talk of job losses, continues to lead to caution among some buyers.”

Ranchhod says Westpac expects the softness in the housing market will gradually give way to a period of stronger activity, underpinned by a multi-decade high in population growth and policy changes to support investor demand.

However, he says interest rates are the biggest cyclical driver of house prices, and with the Reserve Bank signalling it expects to hold the line on the OCR until early 2025, it may be later this year before we see a meaningful drop in term mortgage rates.