Power shifts from sellers as housing market changes pace | Ezine Daddy

Between March and April alone, nationwide home sales plummeted 29.3%, underscoring the ongoing slowdown in the market, according to the Real Estate Institute.

The institute’s latest figures showed that there were just 4,860 sales nationwide in April. That was down 35.2% from sales of 7497 at the same time last year.

On a yearly basis, sales fell more than 10% in each region, but Marlborough saw the largest decline at 53.6%. In Auckland and Wellington they fell by 41.3% and 34.6% respectively.

Jen Baird, executive director of the Real Estate Institute, said the pace of market change is strong and this is reflected in the continued slowdown in sales activity.

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The market underperformed on demand issues, with falling attendance at open houses and auction rooms and a drop in buyer inquiries across the country, she said.

“Affordability, uncertainty and changing financial conditions remain key concerns. Tighter lending criteria, loan-to-value ratios and rising interest rates combined with inflation continue to pose challenges for some buyers, particularly first-time home buyers and investors.”

It is now the phase of the real estate cycle when demand has weakened, sales have fallen and more stocks have stayed in the market longer, but prices have remained high, she said.

While the national median price in April rose 8.8% to $875,000 from $804,362 in April, annual price increases have now been more moderate. At this point last year, the annual increase was 19.1%.

Wellington's median price rose 7.1% annually to $930,000 in April but was down 0.8% month-on-month.

MONIQUE FORD/stuff

Wellington’s median price rose 7.1% annually to $930,000 in April but was down 0.8% month-on-month.

Most regions saw annual price increases, with the largest seen on the West Coast and Canterbury. They rose 31.6% to $362,000 and 20.8% to $684,000, respectively.

But Gisborne, Manawatu/Whanganui and Otago have had annual price drops. And the monthly trend also showed an overall price decline, with the national median down 1.7% from $890,000 in March.

In Auckland, the median price rose 4.5% annually to $1.17 million in April, but declined 2.5% from March, while Wellington’s median rose 7.1% annually to $930,000, but down 0.8% month-on-month.

Marlborough was the only region to set a new record price of $764,000 and only four local authorities achieved record medians, the lowest since October 2015.

Baird said there were many more properties on the market, with a total of 27,050 properties for sale nationally in April, an annual increase of 70.8%.

This, coupled with a less positive financial and economic outlook, meant that demand had eased, easing upward pressure and dampening price growth.

Fear of overpaying has overtaken fear of missing out as buyers took the time to consider the expanded options available and conduct due diligence, Baird said.

Those backed by equity and secure in a job market with a low unemployment rate will continue to see opportunities in the market as more stocks increase choice and prices fall, she said.

Jen Baird, executive director of the Real Estate Institute, says some buyers are seeing opportunity as more inventory increases choice and prices fall.

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Jen Baird, executive director of the Real Estate Institute, says some buyers are seeing opportunity as more inventory increases choice and prices fall.

“Weaker results from our home price index suggest buyers are paying and expecting to pay less, and we’ve heard buyers are increasingly bargaining heavily, suggesting the power has shifted away from sellers.”

This could continue in the coming months and those who commit to selling their property would adjust to the market, she said.

“Despite the shift in sentiment, some sellers’ expectations are now higher than the market is willing to pay and it is likely that some will choose to hold off on selling after ‘testing’ the market.”

Jeremy Couchman, chief economist at Kiwibank, said the institute’s numbers suggested the market was paying for last year’s excesses and made it clear that the coming year would be difficult.

It’s adjusting to the new reality of increasing housing supply, investor-related tax changes, tighter credit conditions and rising mortgage rates, he said. An expected emigration of highly qualified specialists in the course of the opening of the borders would probably not help a market without demand.

“We are now seeing prices fall about 10% in 2022 versus the 5% fall previously projected. However, this price decline is expected to be short and sharp, with modest price increases projected through the end of 2023.”

This view is based on the strength of the labor market and the ongoing shortage in the housing market, he said.

Miles Workman, senior economist at ANZ, said the institute’s numbers, along with information such as listings, auction clearance rates and anecdotes, show the market is firmly in a downtrend.

Economists expect house prices to fall by 10% this year.

Chris McKeen/Stuff

Economists expect house prices to fall by 10% this year.

“This is great news for those who have been locked out of the market, but bad news for recent first-time buyers who tend to have high levels of debt, face rising mortgage rates and watching their equity go up in smoke.”

No one wanted to buy at the peak, and buyer interest is unlikely to pick up again until prices seemed to bottom out, he said.

“Although the price drop in April is slightly smaller than expected, we continue to see downside risks to our 10% decline outlook in 2022.

“We are giving weight to the very tight labor market by giving things a foothold. But the tricky part is estimating that floor, and significant downside risks remain to our forecast.”

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