NZ housing market flooded with unsold properties

The residential property market is flooded with properties for sale at what should be the busiest time of the year for the industry, the latest figures from Realestate.co.nz have suggested.

At the end of February, the property website had 29,083 residential properties available for sale throughout New Zealand – a 25% rise compared to February last year, and the most residential properties the website has had available for sale in any month of the year since 2015.

The situation is quite serious given that the build-up of stock for sale came at a time when the number of properties being newly listed for sale each month has plunged to a record low, interest.co.nz reported.

New listings nationwide on Realestate.co.nz in February numbered 8,143 – a 29% decline compared to February last year, and the lowest number of new listings posted on the website in any February since 2007, when it started collating the figures. It was also the first time ever that the number of new listings in February had been below 10,000.

The increasing number of properties for sale follows record-low sales at the start of this year, according to the Real Estate Institute of NZ.

This meant fewer properties were selling in a market where there is a build-up of unsold properties, giving buyers strong bargaining power.

The Realestate.co.nz figures also contained a clue to what’s causing sales to slow.

Data showed that Wellington was the only region in the country where the total number of homes for sale at the end of February was lower compared to the same period the previous year.

The latest figures from CoreLogic, meanwhile, though perhaps a coincidence, showed that average dwelling values in Wellington have fallen by $215,000 since March last year, down more than anywhere else in the country.

This suggests that there is a significant gap in many regions between the price vendors are hoping to fetch and the price buyers are prepared to pay, resulting in a growing number of properties sitting on the market unsold.

A similar theme is presented in this website’s Residential Auction Results page, where the results showed how the prices of the properties sold at auction compared with their latest rating valuations.

The page showed that only around a third of properties auctioned were sold, with many of those that sold fetching prices that were well below their rating valuations.

If price is the main impediment to securing a sale at the moment, then many vendors will likely face some hard choices if they want to achieve a sale in the current market and prices will likely have to drop further, interest.co.nz said.