The most recent shift back up the alert levels in mid-August caused appraisals generated by real estate agents to drop again (albeit by much less than during April’s lockdown), with the flow of new weekly listings subsequently also staying muted. To be fair, appraisals activity has now begun to rise again and of course we’re also poised to see the usual Spring lift for market activity. However, given the tight starting point for listings/available properties on the market, it wouldn’t be a surprise if would-be buyers continue to find only a limited selection over the next few months.

A prominent issue in the NZ residential property market for at least the last 12-18 months has been the lack of available listings, and hence the restricted choice for buyers – in turn, this has been a factor in property values largely shrugging off the effects of COVID-19 and the recession to date (except for in certain locations, such as Queenstown).

Rolling 7-day count of appraisals generated by real estate agents (Source: CoreLogic)
Rolling 7-day count of appraisals generated by real estate agents (Source: CoreLogic)

Indeed, we entered the initial lockdown in April with a low stock of existing listings on the market, and the subsequent sharp drop in appraisals generated by estate agents then flowed through to a fresh decline in new listings coming to market. The most recent move back up the alert levels in mid-August also saw appraisals decline, although they have at least begun to gradually rise again in the past week or so (see the first chart).

Weekly new for-sale listings (Source: CoreLogic)
Weekly new for-sale listings (Source: CoreLogic)

The second chart illustrates these patterns for new listings. After April’s slump, the weekly flows over June and July this year (orange line) were running at or even slightly above the levels seen in 2019 and 2018 (blue and grey lines), but with that dip in appraisals through the middle of August, new listings have also been weaker on the latest readings – falling slightly below the levels of the past two years. Although appraisals have begun to rise again and there’ll also be the usual seasonal lift of Spring, the bottom line is that the COVID disruptions mean that the supply situation doesn’t look likely to ease significantly in the near term.

Dunedin new for-sale listings year-to-date (Source: CoreLogic)
Dunedin new for-sale listings year-to-date (Source: CoreLogic)

The continued tightness for the weekly flow of new listings (and also the existing stock on the market) can be seen across much of the country, however, there are interesting hints that conditions in the previously very tight Dunedin market may have just started to buck the trend a little. Indeed, despite the hiatus caused by April’s lockdown, the third chart shows that the cumulative total for new listings in Dunedin in 2020 to date (circa 2,000) is only about 5% below where it was (about 2,100) at the same stage last year. For context, the national total so far this year (roughly 87,000) is more than 10% down on 2019’s figure.

Weekly new for-rent listings (Source: CoreLogic)
Weekly new for-rent listings (Source: CoreLogic)

What about in the rental market? As the fourth chart shows, new listings across NZ as a whole were also hit hard by lockdown – and, if anything, have been tracking even lower (compared to past levels) than for-sale listings. Certainly, there’s little evidence here that the feared flood of Airbnb-type properties into the traditional long-term rental sector has been a factor so far.

Overall, the gyrations of the moves up and down the alert levels aren’t doing much to help ease the supply/listings side of the housing market. And there may not be much respite on the horizon either, especially if existing owner-occupiers generally continue to stay where they are (and hence don’t list their property), precisely because they’re worried about not finding their ideal next property. It’s a vicious circle.