ANALYSIS: There are two big takeaways from the latest house price report from the Real Estate Institute of New Zealand. One, it's taking much, much longer for vendors to sell their homes, and two, the results are not always to their liking.
The figures for February paint a fairly grim picture for anyone looking to put their house on the market. The nationwide median sale price was down 13.9% year-on-year to $762,000. That's a drop of more than $100,000. In some regions the comedown has been sharper: Wellington's median sale price has fallen 20.6% ($200,000) over the last 12 months, and Auckland's is down 15.2% ($181,000).
But the drop highlights only part of the picture. The median sale price is the middle price of what actually sold, and in February not a lot of homes were being sold (partly because of the storms and flooding, partly because of rising interest rates). The sales count for the month was 3984, down 30% on the year before. In Auckland, the decline in sales was worse, with 41% fewer homes sold in the country's biggest housing market last month compared to February 2022.
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The REINZ report puts the low sales environment into context. Last month was the worst sales month for the industry in a lot of ways: in Auckland and Marlborough, it was the lowest number of sales since December 1995, and in Wellington, it was the lowest sales month since June 2008 - when NZ was reeling from the GFC. Those are the sort of statistics that point to hard times for the housing market.
And just to ram the point home, the number of $1m sales nationwide last month was down 54% year-on-year, and represented just 26% of total sales, compared to 40% in February 2022.
The REINZ figures around days to sell highlight just how difficult it is to sell property in current market conditions. The median days to sell for New Zealand last month was 60 days, up from 42 in February 2022 and a long, long way from the heady days of the property boom, when sellers were able to shift their homes within three weeks.
Some sellers have it worse. In Northland, the median days to sell is 85 days, and in Wellington it's 69 days. That's a slog, and one that will wear sellers down. Again, the REINZ report puts the numbers into context: it’s the highest median days to sell for Wellington since records began, and the worst for Auckland and Hawke's Bay since 2009.
But the above stats only cover the lucky individuals who managed to find a buyer. There's still a lot of stock left for sale as well, with inventory up 60% year-on-year, which means sellers may have to reduce their prices further to meet the market and nab buyers who have become incredibly selective and incredibly price conscious as a result of rising interest rates.
Does that mean sellers should all pack up and go home? No, but the stats suggest there are further bumps ahead, and that homeowners need to think very carefully about what's selling and what's not, and who's active in the market and who has run for the hills. Are the deals being struck largely due to price, location or property type and condition?
A quick look at the auction results for the past few weeks shows that homes in desirable locations are in demand, but only when the vendor is being reasonable around their reserve. Some properties are selling at close to or above RV in Auckland but most are tracking between 10 and 20% below.
Mid-range apartments are proving to be a tough sell - possibly because downsizers aren't able or willing to sell their large family home - while the market for investor and development-friendly properties in the city has evaporated.
New-builds in the city are also finding life hard, with a glut of similarly priced stock on the market. That's an opportunity for first-home buyers, who should definitely be thinking about the future of the market: prices are going to turn at some point and competition for available stock will increase. Interest rates will come down too. Think of all those buyers in Auckland who missed out on low prices and low interest rates during the city's market slump in 2019 only to find a year later that prices were shooting through the roof.
The results of the latest REINZ survey of real estate agents, by independent economist and OneRoof columnist Tony Alexander, points to more first-home buyers out in the market - and concerns about accessing finance, while still high, are on a downward trend, with some banks offering heavy discounts on their fixed rates.
So where does that leave the market? For sellers, if you haven't got what buyers are after, you'll struggle to secure a deal. For cashed-up buyers, the market doesn't get much better than this.
