Home sales plummet to new lows after market sentiment changes

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Home sales plummet to new lows after market sentiment changes

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More properties on the market and weak demand from buyers mean sales activity has dropped to levels not seen in years, says the Real Estate Institute.

There were 5,597 sales nationwide in February, a drop of 32.8% from last February’s 8324, according to the institute’s latest data.

While there has been a 48.8% increase since January, seasonally adjusted data shows that sales fell 3.2% between January and February.

Sales numbers declined across all regions and at 3,856 the sales count for New Zealand excluding Auckland was the lowest in a February month since 2011.

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In Auckland, sales fell 40.2% annually, from 2912 in February 2021 to 1741 last month. This was the lowest February sales tally since 2019.

Sales in the West Coast, Taranaki and Manawatu / Whanganui also fell by more than 40%, to 55.6%, 41.3% and 40.1% respectively.

Wellington recorded 29.9% fewer year-over-year sales, while Canterbury recorded 26.6 fewer.

Real Estate Institute Chief Executive Jen Baird said February was a slower month for sales than expected as the scale of supply and demand was reversing.

Home sales in Auckland in February fell 40.2% compared to the same period last year.

Alden Williams / Stuff

Home sales in Auckland in February fell 40.2% compared to the same period last year.

The new lending rules, restored loan-to-value ratios, and rising mortgage rates were making buyers increasingly cautious, he said.

“While the appetite and demand for property remain, we are hearing from agents across the country that open houses and auction rooms are quieter.”

At the same time, there was a surge in prices, which began late last year and continued in February, when they rose 7.5% nationwide.

The total number of properties available for sale last month was 23,270, up 47 percent from 15,829 in the same period last year.

Hawke’s Bay, Manawatu / Whanganui, and Wellington all have over 25% more listings than in February 2021.

The increase in available properties, which brought more choice to the market, and weak demand had a depressing effect on the sales activity, Baird said.

“Market sentiment has changed and with the pressure to ease buying, we are seeing less competition, less urgency and less sales.”

Despite the decline in sales activity, median prices still rose, with the national median rising 13.5% to $ 885,000 from $ 780,000 last February.

Jen Baird, chief executive of the Real Estate Institute, says the scale of supply and demand in the real estate market is declining.

Provided

Jen Baird, chief executive of the Real Estate Institute, says the scale of supply and demand in the real estate market is declining.

Canterbury, Taranaki, Southland, Otago, Gisborne and Bay of Plenty all hit record median prices after double-digit annual increases. Taranaki had the largest, up 27.9 percent to a median of $ 665,000.

In Auckland, the median increased 8.2% to $ 1.19 million from $ 1.10 million last February, but it was the region’s lowest annual increase since June 2020.

The Wellington region median increased 10.3 percent year-over-year to $ 993,000 from $ 899,900.

Baird said that while prices were holding, there was now a fear of overpaying (FOOP) among buyers, some of whom were under pressure from legislative changes that impacted their borrowing capacity.

The inflow of stocks into the market was easing the pressure on the demand side and that could further ease price increases in the coming months, he said.

“As median price growth stabilizes and the market gets used to a change in sentiment, it will be interesting to see what March, a generally more intense month than February, brings.

“But with buyers less willing, or unable, to pay the prices we saw towards the end of last year, suppliers will come under pressure to adjust their expectations to meet the market.”

The national average number of days it would take to sell a property increased 11 days to 42 in February, and Baird said that while the properties were selling, it would take longer.

This was due to more choice in the market, less urgency from less urgent buyers and longer lead times to secure funding.

“Some suppliers who are not hitting their expected prices may also choose to hold out rather than sell for less than they hoped for,” he said.

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