Sale volumes drop in June, but first home buyers maintain strong prese…
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19/07/2024. 14:47
KoreaPost
As high mortgage rates continue to dampen buyer demand in New Zealand's housing market, residential property sales weakened in June, after a 13-month growth streak, according to CoreLogic's July Housing Chart Pack.
Figures measured across agent-led and private sale transactions show there were just 4,744 deals done in June; that's 22.1% down from the same time last year, and breaks the consecutive run of growth since April 2023 (-9.6%).
In contrast, the total stock on the market is currently more than 20% above the same time last year.
CoreLogic NZ Chief Property Economist Kelvin Davidson said with listings on the market high, the sluggishness of sales is driven by cautious or restrained buyer demand, not a lack of choice.
"It would appear that some pent-up reluctance by sellers to list in the final few months of last year is now coming forward and turning into available stock this year. That's creating more choice for buyers and feeding into weaker price pressures.
"Even that reduced pool of buyers with the finance, and who can afford 7% mortgage rates, seem to be taking their time and are seemingly being selective on finding the right property," he said.
Mr Davidson pointed out that first home buyers (FHBs) showed fewer signs of pulling back, with their activity continuing to hover at record-highs, especially in Auckland (27%) and Christchurch (29%).
"It would appear that some pent-up reluctance by sellers to list in the final few months of last year is now coming forward and turning into available stock this year. That's creating more choice for buyers and feeding into weaker price pressures.
"Even that reduced pool of buyers with the finance, and who can afford 7% mortgage rates, seem to be taking their time and are seemingly being selective on finding the right property," he said.
Mr Davidson pointed out that first home buyers (FHBs) showed fewer signs of pulling back, with their activity continuing to hover at record-highs, especially in Auckland (27%) and Christchurch (29%).
"First home buyers just keep rolling on, with their market share holding firm nationally at 26%. It's never easy to buy that first home, but at the moment, that group is enjoying lower house prices than at the peak, less competition from other buyer groups, as well as other supports such as access to KiwiSaver for the deposit."
"Given the recent loosening in the loan to value ratio rules, it'll be interesting to see whether that adds an extra boost to FHB activity, who are already making full use of the banks' low deposit lending allowances," he said.
"The other big change in recent weeks has of course been the easing inflation environment and stronger indications from the Reserve Bank that official cash rate cuts could be seen before the end of the year. In other words, there's light emerging at the end of the mortgage rate tunnel for cash-strapped borrowers."
July Housing Chart Pack highlights:
- New Zealand's residential real estate market is worth a combined $1.62 trillion.
- The average property value in NZ edged up 1.8% in the 12 months to June, only due to a short burst of growth around the end of 2023/early 2024. In Q2 2024 itself, the average value dropped by 0.8%.
- Dunedin and Hamilton were the strongest performing main centres, increasing 1.5% and 0.8% respectively in the three months to June, while Auckland led the weakness falling -2.6% over the past quarter.
- June sales volumes saw their first fall in 14 months, down 22.1% compared to the same month last year.
- There were 72,161 sales in the year to June, still well below NZ's longer-term average of about 90,000 per year.
- There were 6,617 new listings over the four weeks ending 7th July.
- National rental growth has now passed its peak and was 2.5% in the year to June.
- Gross rental yields nationally remain at 3.2% (from a trough of 2.6% for much of 2022), the highest level since late 2020.
- Around 63% of NZ's existing mortgages by value are currently fixed but are due to reprice onto a new (generally higher) mortgage rate over the next 12 months.
- Download and subscribe to the monthly CoreLogic Housing Chart Pack at corelogic.co.nz/news-research/reports/housing-chart-pack.
ENDS
Source: CoreLogic