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Residential Sales sit at New Low

House sales have plunged to their second lowest level in about 40 years.

By: Sally Lindsay

20 February 2024

CoreLogic’s February Housing Chart Pack shows there was a total of 3,169 sales in January measured across agent-led and private transactions. This is up only two per cent on the same month last year where levels were at 3,108, the slowest start to the year since 1983.

“January’s sluggishness in sales is a timely reminder the housing market is still facing quite a bit of mortgage rate pressure,” says Kelvin Davidson, CoreLogic’s chief property economist.

Despite this, he says there is clearly still a gradual upturn underway as sales volumes have risen compared to a year earlier in each of the past nine months. On a 12-month basis, national sales have risen 4.5 per cent to more than 67,000. This is up from the April trough of less than 62,000 annually, but still well below “normal” levels of 90,000-95,000 a year.

The swing is also reflected in total sales across the main centres at five per cent and provincial markets at 3.6 per cent over the 12 months to January.

“Arguably, listing levels have returned to some kind of normality, so the reduced sales over the past month probably hints at some uncertainty around buyer demand, rather than a lack of choice,” Davidson says.

“It’ll be interesting to see how sales and listing activity evolves in the next month or so, and how market confidence moves. We suspect the demand will be there to match any additional supply coming on to the market, resulting in an associated rise in agreed sales activity as buyers can see more choice.”

February Housing Chart Pack highlights:

  • Residential real estate is worth $1.62 trillion.
  • National property value gains eased in January, with a rise of “only” 0.4 per cent. Dunedin and Tauranga slightly outperformed with other markets recording flatter results for the past month.
  • Sales volumes in January, across private deals and real estate agents, were about two per cent higher than the same month last year, the ninth rise in a row. And on a 12-month total basis, sales have now risen to 67,400, up from the April trough of less than 62,000, but still well below the average of 90-95,000 per year.
  • New listings activity has started to rise back again after the holiday period, with 8,916 new listings over the four weeks ending February 11, compared with 8,577 from the same time last year and the five-year average (11,428).
  • Total stock on the market is 36,802, eight per cent below this time last year.
  • Rental growth is still running at historically high levels and was 6.8 per cent in the year to January (Stats NZ new tenancy/flow measure) which remains well above the long-term average growth rate of 3.2 per cent and reflects further growth in wages as well as a tightening supply and demand balance.
  • Gross rental yields nationally have edged back up to 3.2 per cent (from a trough of 2.6 per cent for much of 2022), the highest level since late 2020. However, that’s still relatively low by past standards, and is less than the income returns on some other asset classes (e.g. term deposits).
  • Around 56 per cent of NZ’s existing mortgages by value are currently fixed but are due to reprice onto a new (generally higher) mortgage rate over the next 12 months.
  • Inflation seems to have passed its peak and the Reserve Bank will wait to see the effects of the final 5.5 per cent OCR for this tightening cycle. Mortgage rates are close to, or already at, their peak.
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