Market starting to cool

While the number of residential building consents issued continues to break records there are not enough houses for sale and consequently new rentals coming to the market.

The latest data from shows nationally a total of 14,883 houses were listed for sale last month, a drop of 29.9% on the same time last year.

Between March and May this year the number dropped from 11,322 to 8,760.

However, the website shows the average asking price of properties has dropped for two consecutive months.

Across the country the average asking price has cooled in May to $841,193, down by $22,203 from the March average of $863,396.

In Auckland, the average asking price dropped from $1.132 million in March to $1.105 million in May – a drop of $27,081 over two months.

Listings decline

And while prices have dropped the number of houses for sale has also declined.

The number of new listings received by the website has declined for two straight months, from 11,322 in March to 8,760 in May. And the total number of properties available for sale on the site declined from 19,437 to 14,883 over the same period.

“There are simply not enough houses for sale to ease the supply shortage,” says spokeswoman Vanessa Williams.

“Stock shortages are posing a real challenge for buyers.”

She says the number of properties coming on to the market is still not meeting demand and total stock numbers are going backwards.

“It will take a flood of properties coming on to the market to reverse the trend.

“Inventory has remained consistently low over the past year, despite increases in the number of new listings coming onto the market.”

In 19 regions across the country houses for sale fell on a year-on-year basis and in five regions the numbers fell to all-time lows since records began 14 years ago.

Coromandel and central North Island fell 62.3% and 54.7% respectively.

Williams says the drop in stock for sale was despite a 2% rise in new listings nationally.

Construction booming

And it is despite a booming residential construction industry. Although there was a slight fall in the number of new houses consented in April, the numbers still remain at record highs.

New data from Statistics New Zealand shows 3,994 new homes were consented across the country in April, down by 224 – or 5.3% compared to the all-time record of 4,218 in March.

The fall is because of drops in the number of townhouses and stand-alone houses consented, while there were increases in the number of apartments and retirement village units.

The most popular type of new home is a stand-alone house and 23,547 were consented in the year to April. This was followed by 12,876 townhouse and home unit consents, 4,237 apartments and 2,188 retirement village units.

In the 12 months to the end of April, 42,848 new homes were consented, up 15.2% on the previous 12 months.

Levels of strength

Westpac economist Satish Ranchhod says the strength of consents is centred in Auckland, where more than 18,000 new houses have been consented over the past year.

There are also high levels of consents issued in Waikato, Hawke’s Bay, Wellington and Whanganui/ManawatÅ«. There’s also been ongoing strength in Canterbury.

“We are expecting strong home building over the remainder of 2021 and through 2022 and it could be even stronger than we are forecasting, although shortages of labour and material may provide some brake on the pace of building.”

Ranchhod says with the borders still closed, building levels are now well above what’s needed to keep up with population growth.

“Longer term, when the borders do reopen, we don’t expect population growth will return to the levels prior to the Covid outbreak, with the Government now reviewing migration settings.”

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