Optimism Is Creeping Back, But Are We Seeing It In The Property Market Yet?

• Plenty of choice for buyers with total stock up and new listings unseasonably high
• Slower-than-average rate of sale in 10 of 19 regions
• Average asking prices fluctuating across regions

Mortgage interest rate cuts, decreasing inflation, and speculation about the Official Cash Rate dropping sooner than initially signalled may be bringing midwinter economic optimism. However, the latest data from realestate.co.nz suggests we are yet to see the property market warm up, with plenty of choice and slow sales hallmarking the 2024 winter season.

Total stock increased during July by 32.3% year-on-year to 30,556 properties for sale. New listings were also unseasonably high, up 31.3% year-on-year, breaking a seven-year trend of low listing levels in July. Adding to the property market’s winter chill, 10 of our 19 regions experienced a slower-than-average rate of sale last month.

Sarah Wood, CEO of realestate.co.nz, notes that supply was unusually high for July, with almost 7,500 more total homes for sale than this time last year:

“17 of our 19 regions saw double-digit growth to total stock levels compared to July 2023, with just Taranaki and West Coast slightly behind at 6.6% and 8.7%, respectively.”

“Buyers have ample choice and time to decide, but this will be a competitive market for many sellers. They should research local market trends and be prepared to negotiate to meet the market.”

Average asking prices experienced regional fluctuations in July, marking a change from the relative stability seen in most regions over the last 18 months.

“It is too early to determine if these changes signal a market shift. Consumer confidence and interest rate adjustments will likely be key drivers of future market trends,” says Wood.

Display price remains the most popular method of sale across our listings, followed by negotiation. “This again indicates that people are taking their time to transact, reflecting the slower pace of the market,” Wood adds.

Vendors busier than usual this winter - new listings up 31.3% year-on-year

Breaking a seven-year trend of low listings during July, new listings were up 31.3% nationally last month. This growth was reflected in all regions except Taranaki, where new listings dropped by 4.8% compared to July 2023. However, Taranaki’s smaller market size means this was a drop of just seven listings.

The biggest increase was in Central North Island, where new listings nearly doubled, increasing by 92.8% from 69 in July 2023 to 133 in July 2024.

“In this economic climate, some property owners will be forced to sell. Particularly if they bought at the peak of the market when interest rates were low,” explains Wood.

She notes that several economic factors, including recent policy shake-ups, have influenced the market:

“We’ve seen a spate of changes, such as the shortening of the bright-line test from 10 years to two years, effective 1 July. This change allows investors to sell sooner without incurring capital gains tax.”

“While it is too early to attribute the rise in listings to this change, we understand that many investors were geared up to list their properties on or after 1 July.”

Slower than average rate of sale in 10 of 19 regions

Vendors might have been busy listing their properties and tidying up for weekend open homes, but buyers took their time last month. 10 of our 19 regions saw a slower-than-usual rate of sale in July.

Rate of sale measures how long it would take, theoretically, to sell the current stock at current average rates of sale if no new properties were to be listed for sale. For example, in Auckland, realestate.co.nz calculations show that it would currently take 40 weeks for all stock to be sold, compared to the long-term average of 23 weeks. Auckland saw the biggest slowdown in its rate of sale of all regions during July.

Our analysis draws on 17 years of comprehensive property data to ensure accurate insights.

“The high stock levels we have seen throughout 2024, combined with slower sales, could provide opportunities for buyers. However, this depends on individual circumstances. High interest rates and new debt-to-income ratios (DTIs) could impact their ability to purchase.”

“For sellers, understanding current market conditions is crucial. Staying informed, getting advice from your local agent and being flexible can make a significant difference in navigating this slower market,” emphasises Wood.

Average asking price fluctuations across the motu

In July, average asking prices varied across the country. Canterbury, Central Otago/Lakes District, Coromandel, Gisborne, Marlborough, and Otago saw average asking prices grow month-on-month and year-on-year. In contrast, Central North Island, Hawkes Bay, Nelson, Northland, Waikato, and West Coast saw average asking prices decrease month-on-month and year-on-year.

Gisborne’s average asking price reached $710,960 in July, marking the first time it has been above $700,000 since March 2023. Northland, on the other hand, saw its average asking price decrease to $773,623 in July. This is the first time Northland’s average asking price has been below $800,000 since October 2021.

Wood notes these fluctuations are notable as they differ from the more moderate rises and falls of around 5% that have typified the last 18 months:

“It remains to be seen if this signals the end of the 18-month average asking price stability we’ve seen around the country, but vendor expectations may be shifting in some regions.”

The national average asking price in July was down 2.3% year-on-year and 1.4% month-on-month to $848,548. For the last year and a half, the national average asking price has been relatively flat, fluctuating between about $860,000 and $890,000.

Glossary of terms:

Average asking price (AAP) is neither a valuation nor the sale price. It is an indication of current market sentiment. Statistically, asking prices tend to correlate closely with the sales prices recorded in future months when those properties are sold. As it looks at different data, average asking prices may differ from recorded sales data released simultaneously.

New listings are a record of all the new residential dwellings listed for sale on realestate.co.nz for the relevant calendar month. The site reflects 97% of all properties listed through licensed real estate agents and major developers in New Zealand. This description gives a representative view of the New Zealand property market.

Stock is the total number of residential dwellings that are for sale on realestate.co.nz on the penultimate day of the month.

Rate of sale is a measure of how long it would take, theoretically, to sell the current stock at current average rates of sale if no new properties were to be listed for sale. It provides a measure of the rate of turnover in the market.

Seasonal adjustment is a method realestate.co.nz uses to represent better the core underlying trend of the property market in New Zealand. This is done using methodology from the New Zealand Institute of Economic Research.

Truncated mean is the method realestate.co.nz uses to supply statistically relevant asking prices. The top and bottom 10% of listings in each area are removed before the average is calculated to prevent exceptional listings from providing false impressions.

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