It’s a buyer’s market, but buyers are wary

More homes are being put up for sale, but buyer demand is down and the market has stalled, CoreLogic says.

The property research company’s latest figures showed that the average national house price dipped 0.1% to $933,633 in April.

Over the first three months of the year, there were small price increases each month, but the largest was 0.5% in March.

The flat price trajectory has left the national average up 3% from the September trough, but still 10.5% down on the March 2022 market peak.

CoreLogic chief property economist Kelvin Davidson said prices were lacking any strong momentum and, combined with the increase in total listings on the market, that made it a buyer’s market. But it was a buyer’s market with caveats, as mortgage rates and lending criteria remained an issue for many, he said.

“We are calling it a buyer’s market because there is more choice, but that doesn’t matter if a buyer can’t act on it because they can’t get a loan. So it’s a buyer’s market for buyers who can get finance.”

High mortgage rates were the biggest restraint, but while changes to lending rules and loan-to-value ratios were coming, they had not happened yet, he said.

With the total stock of properties for sale up, but actual sales at a subdued level, it was no surprise price growth had flattened off, Davidson said.

Monthly price movements across the main centres were variable, and Dunedin recorded the biggest increase, with its average up 0.7% to $645,121.

Prices in Wellington and Hamilton were up 0.4% to averages of $926,262 and $810,325, respectively. But prices in Auckland fell 0.6% to $1.29 million, while Christchurch and Tauranga prices were flat, down 0.1% to $761,873 and $1.03m, respectively.

Around the regions, most markets had modest monthly price increases, except for Napier and New Plymouth. which had declines of 0.4% and 0.2%, respectively. Rotorua prices increased most, up 1.3% to $654,663.

Davidson said the big-picture theme of an underwhelming upturn for the market this year and possibly into 2025 remained on track. “Inflation and the Reserve Bank's plans for the official cash rate remain hugely influential for market performance in the coming months, with significant mortgage rate falls potentially a story for 2025 not 2024.”

New data from Realestate.co.nz also reveals a nationwide decline in demand, as measured by searches and engagements per listing on the company’s website.

Nationally, searches per listing were down 10.4% annually in April, while engagements per listing decreased by 7.5%.

On a regional level, searches per listing were down or static in 13 of 19 regions, and engagements per listing decreased in 11.

Realestate.co.nz chief executive Sarah Wood said it indicated a cooling of buyer interest amid economic uncertainty.

“In response to the recession, buyers are understandably cautious.”

About 59% of existing mortgages were up for renewal within the next 12 months, and those who fixed two years ago might soon move from interest rates of around 3% to around 7%, she said. “This is likely pulling liquidity from the market and dampening demand. Contributing to this waning demand, stock levels were notably high last month, echoing figures from 2015.”

There were 33,815 homes available for sale nationwide in April, up 18.1% on the same time last year.

New listings were also up nationally by 34.9% annually, but Wood said this reflected a return to normal after weather events last year led to an unusually small amount of new listings last April.