The number of properties for sale in New Zealand has crashed, raising fears that house prices will continue to climb further as competition for homes outstrips supply.
New analysis by OneRoof shows a downwards trend in listings over the last 12 months and the impact this Covid-19 lockdown is having on the market.
There were 6% fewer homes available for sale last month compared to the month before and 36% fewer listings than in August 2020, OneRoof figures show.
The total number of listings for August is the lowest this year, and 14% down on January, which is typically the quietest month of the real estate year as agents and home-owners take holidays.
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What's worrying is that total listings volumes during the current lockdown are 34% lower than they were during the last nationwide lockdown, last year.
The monthly drop in new listings was even sharper, with the number of new properties coming to market last month down nearly 19% on the month before.
Manawatu-Whanganui, West Coast and Bay of Plenty suffered the biggest monthly drops in new listings (-30%), with Auckland, Wellington and Canterbury seeing declines of between 15% and 19%.
The only exceptions to the downward trend in new listings were Gisborne and Queenstown-Lakes, where new listings rose 22% and 7.6% respectively.
The move to an alert level 4 lockdown on August 18 to combat the spread of the Delta variant of Covid-19 put much of the housing market on hold.
Agents will be unable to physically appraise properties, hold open homes or photograph or stage fresh listings until the alert level 2, which is putting further pressure on stock levels.
The fear is that a longer lockdown will see listings volumes dwindle as buyers absorb all the homes currently for sale and homeowners put off decisions to sell in the what is usually the biggest season for the housing market.
The number of new listings in Auckland in August dropped 19% on the month before. Photo / Fiona Goodall
The crunch in supply of properties for sale is likely to put further upward pressure on prices.
The average house value in New Zealand is close to hitting $1 million, according OneRoof's new housing market figures.
Property values across the country grew 5% in the three months to the end of August, pushing the national average property value to $983,000.
Barfoot & Thompson managing director Peter Thompson told OneRoof that the stress points were showing, and the industry was lobbying the Government to allow more activities under level 4 and 3 than currently allowed, more in line with what's allowed in Sydney and Melbourne.
He said that there was also growing pressure on buyers and sellers caught in mid-transection. "There are settlements, inspections that need to be completed. It's the stress and mental wellbeing of any vendors and buyers that we're concerned about," he said.
Nerida Conisbee, chief economist for Ray White New Zealand and Australia, told OneRoof that lockdown rules in NSW and Victoria still allowed property inspections and photography to get new listings to market.
“In this year’s Sydney lockdown, there’s not been a negative impact on pricing and in the lead up to the end of June there was a pick-up in properties available. There’s still a lot of money chasing property.”
Conisbee said that while New Zealand prices had started to stabilise, there may be stronger growth to come in October once we’re out of lockdown.
Bayleys national auctions manager Conor Patton said that new bookings in Auckland, where nearly 60% of sales are by auction, were starting to taper off.
“Even where agents have properties photographed, they’re waiting for changes to alert levels when they can do two viewings a day."
Patton said Christchurch had 28 auctions last week, with more booked now the city is at alert level 3, and both Hawke's Bay and Queenstown had great auction sales through level 4. He said he was braced for a busy summer market right through until Christmas to make up for the loss of a month’s listings and sales in spring.
Chris Kennedy, business owner of Harcourts Gold in Christchurch, said that digital valuations were keeping the listings pipeline filled during lockdown, and he was confident for spring and summer sales.
“The fact is, Covid doesn’t fix a housing shortage. We still have the same shortage and the same low interest rates as before. People are surfing the internet; we’ve had increased traffic and during the two weeks of lockdown enquiries did not ease off.”
He said that the market won’t get back to normal until alert level 2 when people can attend open homes. Like Patton, he expects a booming market through to December.
The chief executive of the Real Estate Institute of New Zealand, Jen Baird, said that unlike last year’s lockdown, the market was confident and buyer enquiry was strong.
"An all-time low level of stock around the country, [is] causing people to experience a fear of not finding anything. Some are therefore refraining from listing their property until they have secured another, adding to the shortage of stock, and creating a cycle,” she said.
"We expect this spring to be no different albeit with that lift in activity delayed until the country gets through this latest outbreak.”
James Wilson, director of valuation at Valocity, said the fact that New Zealand’s average property value was just several thousand dollars from hitting the $1m mark showed just how much heat there had been in the market since the end of the first Covid lockdown.
“Value levels are still increasing, fuelled by low interest rates and low listing volumes,” he said.
Wilson added that the current Covid restrictions would likely tighten listings volumes further, raising the prospect of a spike in prices once the country fully comes out of lockdown.
"The Reserve Bank's decision last month to delay an increase in interest rates until the country is out of the current crisis is also likely to fuel a post-lockdown bounce in prices. And while sales volumes may have dropped over the last two weeks, prices have not."
