Influx of new listings cools housing market
A big increase in the number of homes being put up for sale is putting downward pressure on house prices, Quotable Value (QV) says.
The property valuation company has released its latest house price index, and it shows that prices increased by 2.2% nationwide to an average of $924,734 over the first quarter of this year.
That was up slightly from a 1.3% rise over the three months to February.
Only four of the 16 areas monitored had quarterly prices increases of more than 1.5%, and the biggest increase was in Queenstown, where the average price was up 2.7% to $1.82 million.
Wellington, Christchurch and New Plymouth followed with increases of 2%, 1.5%, and 2.1% to averages of $875,392, $763,993, and $721,558 respectively.
In the other centres, price growth was moderate, and Auckland, Whangarei, Hamilton, Rotorua, and Hastings recorded quarterly price falls.
Auckland prices were down 0.2% to an average of $1.28m, and it marked the second month in a row the region’s prices had declined.
Only New Plymouth, Palmerston North (up 0.6% to $646,150), and Invercargill (up 0.7% to $480,637) had stronger price growth in the latest index than they did in last month’s data.
Quotable Value operations manager James Wilson said the modest movement in prices nationwide was a reflection of a market trying to find its footing in the midst of some strong economic headwinds.
A big influx of new listings appeared to have had a cooling effect on prices in many areas, particularly in Auckland where prices had largely stalled in recent months, he said.
The number of new listings nationwide was up by almost 24% over the year to March, and the total number of homes for sale was now “back to levels not seen since 2015”, according to Realestate.co.nz’s latest figures.
But while sales had been rising from the record lows of last year, they were being outpaced by the number of new listings, commentators have said.
Wilson said the large number of properties for sale meant the pendulum had swung in favour of buyers, and there was now plenty of choice for all buyer groups around the country, not just in certain areas. But the new market was characterised by buyers taking their time to make decisions and a lack of urgency, and it is helping to maintain downward pressure on prices overall, he said.
“It’s basic supply and demand. More supply is available, but demand is at similar levels to where it has been for some time.
“Interest rates and credit constraints continue to hold people back, so there has not been a rush of new buyers on to the market because of the greater choice available, or changes to tax policies for investors.”
The result was that prices had remained soft, or flat, and sellers, and real estate agents, who had entered the market in the last 10 years, were having to adapt and adjust their expectations, Wilson said.
“Economic headwinds are still very strong, but in terms of the unknown, we are not seeing a big spike in mortgagee sales.
“They have gone up since the boom, which was expected, but the big unknown is how under pressure many new sellers are. Are they coming to market in a rush because they have to sell, or have they just decided it is time to move on?”
There had not been properties coming to market with slashed prices which would suggest seller pressure, but the area was one he would be watching closely, he said.
“We are expecting to now see a return to a more traditional seasonal cycle in real estate, one where the market is subdued over winter, and then picks up over the warmer months.”
But the price curve was likely to remain on a similar flat trajectory to that seen in recent months, Wilson said.
“Immigration is helping to fuel demand, so it’s still unlikely that we’ll see any strong price declines as we move into the cooler months of the year, but it’s equally unlikely we’ll see any sudden strong price growth.
QV’s call was for a 3% to 5% price rise over the year, and on a quarterly basis that meant prices might creep up by about 1% over winter, he said.