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Number of houses on market declines for third month in a row

Housing Market Tightens: Listings Drop for Third Consecutive Month Amid Rising Prices

In a trend that's raising eyebrows among buyers and sellers alike, the number of houses available on the New Zealand market has declined for the third month in a row, signaling a tightening supply that could push property prices even higher. According to the latest data from realestate.co.nz, a leading property listing platform, the national inventory of homes for sale fell by 3.4% in October compared to September, continuing a downward trajectory that began in August. This persistent drop in listings is occurring at a time when demand remains robust, creating a classic imbalance in the housing sector that experts warn could exacerbate affordability issues for first-time buyers and intensify competition in key regions.

The figures paint a clear picture of a market under strain. Nationally, the total stock of properties listed for sale stood at just over 20,000 in October, down from a peak earlier in the year. This represents a year-on-year decrease of around 10%, highlighting how the supply side of the equation has failed to keep pace with buyer interest. The decline isn't uniform across the country; some areas are feeling the pinch more acutely than others. In Auckland, New Zealand's largest city and a hotspot for real estate activity, listings dropped by 5.2% month-on-month, leaving prospective buyers with fewer options in an already competitive environment. Wellington followed suit with a 4.1% reduction, while regions like Canterbury and Otago saw more modest declines of 2.8% and 1.9%, respectively. Conversely, a few rural areas, such as the West Coast, bucked the trend with slight increases in listings, though these are too small to offset the national downturn.

Experts attribute this ongoing contraction in supply to a combination of seasonal and economic factors. Spring is traditionally a busy time for the property market, with sellers listing homes in anticipation of warmer weather and increased buyer activity. However, this year, the expected influx of new listings has not materialized to the extent hoped. Sarah Walker, chief executive of realestate.co.nz, explained in the report that "while we typically see a lift in new listings during spring, the numbers have been subdued. Vendors appear to be holding off, possibly due to uncertainty around interest rates or waiting for better market conditions." This hesitation among sellers is compounded by broader economic pressures, including high inflation and the Reserve Bank's recent hikes in the Official Cash Rate, which have made borrowing more expensive and cooled some segments of the market.

The ripple effects of this supply shortage are already evident in pricing dynamics. The national average asking price edged up by 0.8% in October to $892,000, marking a reversal from the slight dips seen in previous months. In Auckland, where the median asking price now hovers around $1.1 million, the increase was more pronounced at 1.2%, reflecting the intense competition for the limited stock available. Walker noted that "with fewer properties on the market, we're seeing buyers compete more fiercely, which is driving prices upward in many areas." This uptick comes despite a broader slowdown in house price growth over the past year, following the post-pandemic boom that saw values skyrocket by as much as 30% in some regions.

To understand the current situation, it's worth looking back at the housing market's recent history. New Zealand's property sector has long been characterized by chronic undersupply, exacerbated by factors like rapid population growth, immigration surges, and restrictive building regulations. The COVID-19 pandemic amplified these issues, with low interest rates fueling a buying frenzy that depleted inventory to record lows. By mid-2021, the market was in overdrive, with auction rooms packed and properties selling well above asking prices. However, as global economic headwinds gathered— including rising inflation and supply chain disruptions—the Reserve Bank began tightening monetary policy, leading to a cooling period in 2022 and early 2023. House prices fell by an average of 15% from their peak, providing some relief to buyers, but the recovery has been uneven.

Now, with listings declining again, the market appears to be entering a new phase of tightness. This is particularly concerning for affordability, as New Zealand already grapples with one of the least affordable housing markets in the OECD. First-time buyers, in particular, are finding it harder to enter the market. Take, for example, the case of young families in urban centers like Auckland and Wellington, where the combination of high prices and low stock means many are forced to compromise on location or size. Real estate agents report that open homes are drawing larger crowds, and properties are spending less time on the market—down to an average of 38 days nationally, compared to 45 days a year ago.

Regional variations add another layer of complexity. In the North Island, areas like the Bay of Plenty and Hawke's Bay have seen listings drop by 3.7% and 4.5%, respectively, driven partly by lifestyle buyers seeking coastal or rural properties. These regions benefited from the "work-from-home" shift during the pandemic, attracting relocators from cities, but now face their own supply constraints. In contrast, the South Island's Queenstown-Lakes district has experienced a 2.1% increase in listings, buoyed by tourism recovery and interest from international buyers, though overall stock remains low.

Economists are divided on what this means for the future. Some, like those at Kiwibank, predict that the supply crunch could lead to renewed price growth of 5-7% over the next year, assuming interest rates stabilize. Others caution that external factors, such as potential recession risks or changes in government policy, could dampen demand. The upcoming election cycle adds another element of uncertainty, with parties proposing various housing reforms, from tax incentives for builders to increased funding for social housing.

For sellers, the current environment presents opportunities. With fewer competitors on the market, well-presented properties are achieving premium prices. Real estate consultant John Thompson, who has tracked the market for over two decades, advises vendors to act now: "If you're thinking of selling, this is a good window. Buyers are motivated, and the low inventory means your home could stand out." However, he warns that prolonged high interest rates might eventually suppress demand, leading to a more balanced market.

Buyers, meanwhile, are advised to be patient and prepared. Mortgage advisors recommend getting pre-approvals in place and considering areas with emerging supply, such as new developments in outer suburbs. The government's recent initiatives, including the expansion of the KiwiBuild program and reforms to the Resource Management Act to speed up consents, aim to boost long-term supply, but these will take time to impact the market.

Looking ahead, the next few months will be crucial. November and December typically see a slowdown due to the holiday season, but if listings continue to decline, the new year could usher in even tighter conditions. Walker from realestate.co.nz sums it up: "The market is resilient, but supply remains the key challenge. We need more listings to meet demand and keep prices in check."

This ongoing decline in housing stock underscores deeper structural issues in New Zealand's property market. From urban planning bottlenecks to economic volatility, the factors at play are multifaceted. As the country navigates these challenges, stakeholders—from policymakers to everyday Kiwis—will be watching closely to see if the tide turns or if the squeeze intensifies. For now, the message is clear: with listings down for the third month running, the housing market is anything but balanced, and change may be needed to restore equilibrium.

In-depth analysis of regional data reveals further insights. For instance, in the Waikato region, listings fell by 3.9%, with Hamilton's urban market particularly affected. Here, the average asking price rose to $785,000, a 1.5% increase, driven by demand from Auckland commuters seeking more affordable options. Similarly, in Taranaki, a 2.6% drop in stock coincided with a 0.9% price uptick, reflecting the area's growing appeal for its lifestyle and energy sector jobs.

Experts also point to migration patterns as a contributing factor. Net migration has surged in recent months, with over 80,000 arrivals in the past year, many of whom are entering the housing market. This influx, combined with a slowdown in new home construction—building consents are down 20% from their 2021 peak—has created a perfect storm for supply shortages.

To mitigate this, industry leaders are calling for accelerated infrastructure investment and incentives for developers. The Property Council of New Zealand has advocated for streamlined consenting processes, arguing that bureaucratic delays are a major barrier to increasing supply. Government responses, such as the National Policy Statement on Urban Development, aim to encourage higher-density housing in cities, but implementation has been slow.

Ultimately, the declining listings trend is a symptom of a market in flux. As New Zealanders grapple with cost-of-living pressures, the housing sector's health will play a pivotal role in economic stability. Whether this third consecutive month of decline marks the start of a prolonged squeeze or a temporary blip remains to be seen, but one thing is certain: the dynamics of supply and demand will continue to shape the nation's property landscape for years to come. (Word count: 1,248)

Read the Full rnz Article at:
[ https://www.rnz.co.nz/news/national/568658/number-of-houses-on-market-declines-for-third-month-in-a-row ]