Property website realestate.co.nz says the slump in housing sales has pushed stock levels up a whopping 77.6% year-on-year nationally, a level not seen since 2019.
At the end of May the website had 26,301 residential properties available for sale.
In Wellington, which remained in a buyers’ market for the third consecutive month, stock levels almost tripled, up 187.9%, during May compared to the same month last year.
Trade Me property data showed Wellington region properties for sale rose by a staggering 90% in April alone.
Realestate.co.nz figures also show year-on-year stock levels also rose 168.2% in central North Island, 148.3% in Hawke's Bay, 147.9% in Wairarapa and 147.7% in Bay of Plenty.
The stock increases have impacted demand in some regions and taken some of the heat out of the market, says realestate.co.nz spokeswoman Vanessa Williams. “People are asking whether the demand for property will wane enough to see prices reduce.
“Looking back to 2019, average asking prices continued to increase despite stock fluctuations," says Williams.
Although average asking prices have been declining nationally since February, she says property is still in high demand. There might not be the dramatic price drops some have speculated, particularly if the immigration gates open.
"There are many factors impacting the property market– from rapid inflation and interest rate hikes to housing intensification on the horizon thanks to the RMA amendment act," says Williams.
Month-on-month prices droppeded in 11 regions and by more than 5% in four regions – Waikato -15.5% to $850,381, Gisborne, -9.2% to $669,979, Hawke’s Bay, -5.9% to $842,245, and Southland, -5.8% to $496,612.
Nationally and in Wellington, West Coast and Manawatu/Whanganui, average asking prices remained stable.
Williams says the drop in the Waikato region last month is probably a correction of April's price surge when the region's average asking price tipped over $1 million.
Compared to last year, however, average asking prices were up nationally and in all 19 regions last month.
The South Island came out on top during May with record average asking prices of $738,241 in Canterbury, up 28.8% year-on-year and $1,456,348 in the Central Otago/Lakes district, up 27.7% year-on-year.
Meanwhile, the number of consented new houses slumped in April.
Stats New Zealand says consents for 3,719 new properties were issued, down 30% on March figures and 6.9% compared to April last year. In the year to April 50,583 consents were issued thoughout the country.
Most of the drop was for apartments, down 44% compared to the same month last year and retirement village units, down 42%.
The long-term trend is for terraced housing - also known as townhouses - and they are nearly at the same number of consents as stand-alone houses, which have been the dominant type of housing sought by buyers of new properties for decades.
There were 1,653 stand alone houses consented in April, compared to 1,625 townhouses and units in April. This is likely to reverse by the end of the year.
The total value of all residential building work consented in April came in at $1.797 million , down from $2.291 billion in March.
Fall in house prices
ANZ economists have revised their forecast for a drop in house prices this year to 11%.
This is up 1% from their previous forecast of 10%.
ANZ chief economist Sharon Zollner says the message from the Reserve Bank is to expect higher OCR rates and sooner, means the bank has baked in a slower housing market recovery.
“The sharper decline in house prices simply reflects changes to the interest rate outlook. But the soggier medium- term view is a result of revisiting our estimates of the fundamentals: housing supply vs demand.
“On that front, downward revisions to the net migration data (and therefore the resident population) have recalibrated our understanding of how quickly the residential construction industry is eroding the housing deficit, says Zollner.
At the first quarter of the year, the bank estimated new housing supply had exceeded new demand by almost 55,000 dwellings since the country’s borders were closed.
“If the first quarter’s pace continues, the industry will have caught up by more than 60,000 houses,” says Zollner.
“We estimated the housing deficit before the pandemic was somewhere between 70,000 and 90,000 houses. That means at the current pace of building, the country could, for the first time in a very long time, have a housing market that’s broadly in equilibrium in terms of the demand and supply fundamentals.
She says it’s entirely possible that in a few quarters, it might start looking like the New Zealand housing market is at risk of entering “oversupply” territory – not a bad thing when it comes to ensuring there are roofs over the heads of our most vulnerable, but not a good thing for recent first home buyers who may not see the market value of their property return to the level they paid for it for a long time.
“The way things are heading, and based on our current forecasts, it’s looking like housing supply will be in balance with demand by Christmas - give or take 6 months,” says Zollner.
“All else being equal, that would dampen house price inflation over the medium term. However, the market will also remain heavily influenced by the likes of interest rate settings, net migration, and policy changes.”