The New Zealand Property Market - Winter Edition
The New Zealand property market is experiencing a cooling phase as economic challenges weigh on activity. House prices, which have been steady and stable for much of the year, are showing signs of softening in response to changing market conditions.
According to the Real Estate Institute of New Zealand (REINZ), June 2024 saw the lowest sales volume since the global financial crisis. This trend reflects the broader economic climate, significantly influencing buyer confidence and market activity. Despite the low sales volume, prices remained stable throughout June, with many sellers holding out for their desired offers. However, July has brought a shift, with sellers becoming more flexible in their pricing to align with the current market demands. This adjustment has led to an increase in accepted contracts as sellers lower their expectations.
REINZ Chief Executive Jen Baird highlighted the seasonal and economic factors at play, stating, “The typical winter lull, compounded by current economic conditions, has contributed to lower levels of activity in the market. This sentiment is reinforced by seasonally adjusted figures, which reveal a national sales decrease of 11.1% compared to May 2024, reflecting a market performance below expected levels.”
Key Insights from REINZ June Data
- The national median price dropped from $780,000 to $770,000. A slight year-on-year decrease of 1.3%.
- The NZ median price outside of Auckland increased slightly by 0.4%, from $682,500 to $685,000 year-on-year.
- Seasonally adjusted figures show an overall sales decrease of 11.1% compared to May 2024, showing the market is performing worse than expected for this time of year.
- New listings saw a significant increase of 25.5% year-on-year, rising from 6,218 to 7,805.
- The median number of days to sell a property decreased by one day, from 48 to 47 days, compared to a year ago.
- There were 489 auctions in June 2024, accounting for 11.2% of all sales, compared to 551 auctions (9.4% of all sales) in June 2023.
These figures highlight a market that, while seeing an increase in supply, is grappling with a decline in buyer activity, leading to lower national sales figures.
The economic uncertainty has made buyers more cautious, and many are taking their time before making purchasing decisions. The increase in listings and the length of the median days to sell, indicate that while more properties are coming onto the market, they are not being snapped up as quickly as in previous years.
Interestingly, first-home buyers remain the most active group in the market. This demographic could be capitalising on the current conditions, with many sellers adjusting their expectations, making properties more accessible to those entering the market for the first time.
Another emerging trend is the preference for the display price method of sale. This approach provides transparency for buyers, allowing them to see the asking price upfront rather than navigating a potentially stressful auction process. This method is particularly appealing in the current market, where buyers are cautious and prefer a more straightforward approach to purchasing property.
What Does This Mean for First-Home Buyers?
For first-home buyers, the current market presents both opportunities and challenges. On one hand, the cooling market and price adjustments make it a good time to enter the property market. However, the economic conditions that have led to this slowdown also mean that securing financing could be more challenging, and the uncertainty around job security and the economy may make some hesitant to commit to such a significant investment.
The Latest OCR Update
On August 14th the Reserve Bank dropped the OCR by 25 basis points to 5.25 per cent – the first cut in four years. So the question now is how quickly will the New Zealand housing market respond to this new-found positivity about interest rates. Some banks’ mortgage rates shifted rapidly on the day of the announcement. Kiwibank promptly reduced its variable rates by 25 basis points, fully reflecting the cut. Meanwhile, ASB lowered both its floating and fixed rates, with its 18-month term decreasing by 34 basis points. The next OCR update is due in October some economists are predicting a further fall.
Get in touch with the Rapson team today to discuss how these changes might impact you and to find your next opportunity.