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NZ Property Market Sees Modest Sales Growth Amidst High Listings and Flattening Prices

Date Published: 20 June 2024

Key Facts

  • Sales activity increased by 9.2% annually in May, with 6,789 transactions.
  • Overall sales volumes are below the normal annual level, with 73,181 deals in the past 12 months.
  • New listings are supplementing inventory, benefitting buyers in negotiations.
  • House prices have slightly decreased in Auckland, Wellington, and Tauranga.
  • Total property stock is 15.8% higher than last year and 27.6% higher than the five-year average.
  • First-home buyers account for 25% of purchases, while relocating owner-occupiers maintain around 26% market share.
  • Regulatory changes are expected to have limited short-term impact on the market.
  • The market recovery in 2023 was driven by a strong labour market and net migration, but momentum has recently slowed due to affordability pressures and high mortgage rates.
  • New Zealand’s residential real estate market is valued at $1.63 trillion.
  • Average property values increased by 1% over 12 months to May, with Dunedin and Hamilton performing notably well.
  • National rental growth has decelerated to 3.8% in the year to May, with gross rental yields at 3.2%.

Article Summary

New Zealand’s property market is experiencing a modest recovery in sales volumes, yet overall activity remains restrained. According to CoreLogic NZ, sales increased by 9.2% from the previous year in May, marking the 13th consecutive month of rising sales activities. Despite this, the annual sales volume of 73,181 transactions remains significantly lower than the typical 90,000 per year, reflecting ongoing market challenges.

New listings are contributing to the increase in total stock on the market, granting buyers more leverage in price negotiations. CoreLogic’s House Price Index reported slight price drops in key cities like Auckland, Wellington, and Tauranga for May. Consequently, total housing inventory has expanded by 15.8% compared to last year, indicating a broader trend of price stabilization across the market.

First-home buyers continue to make up 25% of the market, taking advantage of lower prices and reduced competition along with favourable low-deposit finance options. Meanwhile, owner-occupiers are capitalizing on a surge in listings, addressing pent-up demand from the pandemic years. Regulatory updates, including adjustments to the Brightline Test and mortgage interest deductions, are anticipated to have minimal immediate effects on market dynamics.

Although the market’s resurgence in 2023 was propelled by a resilient labour market and strong net migration, recent trends suggest some loss of momentum. Persistent high mortgage rates, an uptick in housing listings, and emerging unemployment issues are contributing to this deceleration. Economic measures such as tax cuts and changes to loan-to-value ratios are unlikely to significantly alter the market’s current state amid the high interest rate environment.

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