The traditional spring bounce for new property listings has begun, and it’s no surprise that those parts of NZ with already high stock levels (e.g. Auckland) are experiencing softer property value growth. Affordability pressures for buyers is just one factor indicating that the rise in listings over spring and into summer won’t be any bigger than normal, with some prospective vendors choosing just to sit tight rather than list.

As we approach the end of the first month of spring, it’s a good time to assess how listings have moved and just how strong (or weak) the traditional seasonal rise in the number of properties on the market has been. This will influence property values as we move through the rest of spring and into summer.

Graph 1
Weekly new listings (Source: CoreLogic)

As the first chart (above) shows, the spring bounce for new listings coming onto the market has well and truly begun, with new listings higher than they were a year ago - both in Auckland and across the rest of NZ. At face value, that will be giving prospective buyers more choice, putting pressure on vendors to limit asking prices.

Graph 2
Total listings (Source: CoreLogic)

But it’s important to note that the total stock of listings on the market outside Auckland is pretty much the same as it was a year ago (refer second chart - above), suggesting that the new listings increase is merely offsetting other vendors removing their properties for sale – mostly because the property has already been sold. Auckland is singing to a different tune, with total listings already elevated and starting to tick even higher. Without the ‘fear of missing out’ factor for buyers, the near-term outlook for property values in our biggest city remains pretty flat.

Below these headline numbers, the regional breakdown backs up what we already know about value changes. Waikato, for example, has higher listings levels than a year ago (more favourable for buyers),  hence value growth has been sluggish. In Otago and Wellington, total listings are at or below where they were a year ago, and so it’s no surprise that these parts of the country are showing decent value lifts. Elsewhere, the strongest gains in values around ‘regional’ New Zealand have been in cities such as Invercargill, Whanganui, and Palmerston North. No surprises then that total listings in the wider Southland and Manawatu-Whanganui regions are correspondingly low (see the third and fourth charts, below).

Graph 3
Southland listings (Source: CoreLogic)

 

Graph 4
Manawatu-Whanganui listing (Source: CoreLogic)

So; where could values head?

What matters most for values is whether listings rise by more or less than normal as we move through spring and summer. Market feedback from investor groups is reassuring; few existing landlords are thinking of responding to new regulations by selling their properties. Likewise, for existing owner-occupiers who are considering selling but don’t absolutely need to, NZ’s well-known affordability problem may encourage them to keep their property off the market.

Both these factors suggest that the likely rise in listings over the next few months may not be any bigger than normal, which in turn should help prevent the current orderly slowdown in values from turning into something worse. The competitive pressures in the mortgage lending market and further cuts to interest rates by some banks in the past days and weeks simply add to that benign outlook.