PHOTO: Auckland property is in a ‘price correction cycle’. FILE
As reported in the NZHERALD national house sales hit a record-breaking trough last month, slumping to the lowest since the Real Estate Institute began keeping records in 1992.
Auckland prices are now down 21.7 per cent annually, under $1 million.
Jen Baird, institute chief executive, said today that January was always slow because people were holidaying but it was much worse than usual last month.
“January is traditionally a slower month as sellers and buyers are on holiday. This month is no exception, although intensified in Auckland by relatively poor weather, with the least number of sales since records began,” she said.
Only 2759 NZ homes were sold last month and just 943 in Auckland.
National sales dipping below 3000 deals was something to note, Baird said.
Low volumes hit prices too.
The median national sale price fell 13.3 per cent annually to $762,500 and decreased 9.3 per cent for New Zealand, excluding Auckland, to $679,000.
Auckland prices are now below $1m, decreasing to $940,000, down 21.7 per cent.
Wellington, Auckland, Northland and Bay of Plenty had the largest drop in the median sale price, down 16.4 per cent, 21.7 per cent, 16.6 per cent and 18.8 per cent respectively.
The REINZ House Price Index fell 13.9 per cent.
Baird cited rising interest rates, problems getting finance, commentary around a looming recession and the election as reasons for buyers’ slow decision-making moves.
The Herald has reported how nearly half of New Zealand’s mortgage debt is due to be refixed between last October and this September and some borrowers are likely to see a big jump in their repayments.
Mortgage rates fell to record lows of around 2.25 per cent as the official cash rate was slashed to 0.25 per cent in May 2020 but the OCR has risen sharply since October 2021 and by January was at 4.25 per cent, with the Reserve Bank forecasting it to go to 5.5 per cent.
A one-year fixed-rate term is now over 7 per cent for a standard rate and around 6.5 per cent for those with 20 per cent equity.
For a borrower with a $300,000 mortgage, jumping from 3 per cent to 6.5 per cent could mean having to find an extra $600/month. A $500,000 borrower may have to find an extra $1000/month, all while other costs are rising.
Baird said NZ houses were taking much longer to sell.
“As a result, properties are spending longer on the market with 53 being the median days to sell for January 2023, 16 days longer compared to January 2022,” she said.
National listings decreased 16 per cent year-on-year from 7912 in January 2022 to 6646 in January 2023, and increased 28.9 per cent month-on-month from December 2022.
National sales listings, excluding Auckland, fell 10.4 per cent from 5512 last January to 4635 last month.
Baird remains optimistic, saying so many unsold places gave buyers lots of options.
“Reports of more activity in the market are growing. Agents in many areas are reporting more attendance at open homes, more interest online and even more multi-offer situations. Inventory has increased 39.4 per cent year on year, now sitting at 27,732 properties which provides plenty of choice for buyers. Add to that prices that have eased over the last 12 months, and some less bad economic news coming out recently, it seems there are more buyers active in the market. February and March data will tell us if they choose to act,” she said.
The Herald has reported that fewer people became licensed real estate agents but numbers are still high, according to the Government agency which regulates the sector.
The Wellington-headquartered Real Estate Authority said in the year to June 30, 2022, New Zealand had 16,866 agents and entities licenced to sell real estate, which was historically high.
But numbers fell lately by 198 licences to 16,668 licences.
“The growth has also slowed over the last six months, but remains high,” the authority said last month.
A key indicator of employment in the sector is the number of new licence applications. The authority said that can be a bellwether, showing the level of interest in selling properties for a living.
“On a month-by-month basis, approved applications reached historically high numbers through much of 2021 and while they remained relatively high in the first half of 2022, in the second half of last year we began to see the number of new licence applications soften to levels more in line with longer-term trends,” the authority said in January.
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