Buyers are returning to the market with an increase in sales eating into the country’s listings levels, and expected to place a degree of upwards pressure on property prices in the coming months.
CoreLogic NZ’s Monthly Housing Chart Pack, released today, shows residential sales figures increased 17% in the 12 months to June, hot on the heels of the 8% annual bump recorded in May.
CoreLogic NZ Chief Property Economist Kelvin Davidson said two consecutive months of improved activity, measured across agent deals and private activity, was a strong indication that sales volumes were bottoming out.
“It’s important to note that this increase has started from a low base, but as pent-up demand starts to emerge it’s likely we’ll see more increases in sales activity in the remainder of 2023,” Mr Davidson said.
An improvement in sales volumes reflects the broad peak in mortgage rates, the ongoing strength of the labour market, high net migration, and slightly looser credit rules – as well as a tentative change in house-buyer confidence.
The figures also showed new listings remain sluggish, down -30.8% in the four weeks to 2nd July compared to the same period last year and they remain almost 25% below the previous five-year average.
Mr Davidson said with the weekly flows of new listings coming onto the market still running at low levels, this early upturn in sales is now eating into the total stock of listed property, especially in key areas such as Auckland, Bay of Plenty, and Wellington.
“The flow of new listings coming onto the market each week has remained sluggish month-to-month, as would-be vendors choose to ‘wait and see’, given the uncertainty about how long a sale might take and/or the potential price achieved,” he said.
“Arguably it remains a ‘buyer’s market’, with the national total stock of listings on the market still relatively high. However, there is also a downwards trend now evident for stock levels too, which may start to contribute to competitive price pressures.”
This month’s CoreLogic House Price Index (HPI) showed the decline in values nationally accelerated to 1.2% over the month, taking the annual downswing to 10.6% in the year to June.
Still, Mr Davidson said the trend wasn’t unusual, given the natural lag between sales and prices. And the second half of the year was likely to hold some kind of housing market upturn.
“The end of the downturn doesn’t necessarily mean the market is destined for a sharp rebound,” he said.
“Housing affordability is still stretched, and caps on debt to income ratios loom large in 2024. The second half of the year still looks likely to hold some kind of housing market upturn – which will be good or bad, depending on your perspective.”