Housing market: Surplus of listings and a lack of urgency

The housing market looks set for a winter of discontent with a surplus of listings and a lack of urgency among buyers.

Residential property values have largely plateaued across New Zealand in recent months, with sales volumes expected to drop in the coming months.

The QV House Price Index for April shows the national average value was flat with a 0.1 per cent rise to $926,772 in the three months to the end of April 2024.

The data reflected a significant slowdown in residential values from the 2.2 per cent quarterly home value growth recorded at the end of March.

The national average value is now 2.7 per cent higher than at the same time last year, but still 12.9 per cent ($136,993) below the market's peak in late 2021.

QV operations manager James Wilson said the property market could be in for a quiet winter.

"These flat conditions, we probably expect them to continue throughout winter," James Wilson said.

"In fact we might get a little bit of worsening or softening in some markets as we can see that quarterly growth beginning to stall backwards in some key areas."

Cities are losing momentum with Auckland's three-month rolling average negative for the third straight month.

The Super City's average home value decreased by 0.7 per cent to $1,281,996 this quarter. It follows reductions in February (0.4 per cent), (0.2 per cent), and April (0.1 per cent).

Tauranga (0.2 per cent) Hamilton (0.0 per cent), Wellington (0.6 per cent), Palmerston North (-0.1 per cent), New Plymouth (0.7 per cent) Napier (-0.2 per cent), Nelson (0.8 per cent) and Christchurch (0.2 per cent) recorded flat or negative growth rates in average home values.

The data reflected residential property values continuing to slowly rise in Invercargill (3.2 per cent), Rotorua (3.6 per cent), Dunedin (2.1 per cent), Queenstown Lakes (1.1 per cent) and Marlborough (1.1 per cent).

Vendors with unsold properties face a nervous winter and some big decisions.

Wilson said sellers will have to either readjust their price expectations or move to the sidelines.

"There will be some vendors who if they need to sell, will have to realign their sales price," he said.

First-home buyers appear to have the upper hand provided they have stable employment and finance in place.

"Although getting finance and being in a position to service a mortgage in this economic environment certainly isn't easy, buyers now control the narrative in most areas. They have time on their side and plenty of options to choose from," Wilson said.

"We haven't seen large numbers of investors re-enter the market following the recent reintroduction of 80 per cent interest deductibility for landlords, and the looming introduction of debt-to-income restrictions will almost certainly hamper their ability to purchase existing property when it eventually happens."

rnz.co.nz

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