High interest rates continue to weigh on New Zealand’s housing market, with monthly sales volumes seeing the second-slowest January in 40 years.
CoreLogic’s February Housing Chart Pack found that despite the 3,169 sales in January being 2 per cent higher than last year, it was still the second-slowest start to the year since 1983.
CoreLogic NZ Chief Property Economist Kelvin Davidson said the weakness in sales highlighted the variability from month to month.
“January’s sluggishness in sales is a timely reminder that the housing market is still facing quite a bit of mortgage rate pressure,” Mr Davidson said.
Mr Davidson said despite the soft volumes, there was still clearly a gradual upturn underway, with sales volumes increasing for the past nine months, compared to a year earlier.
On a 12-month basis, national sales have increased 4.5 per cent to more than 67,000, up from the April trough of less than 62,000 annually, but still well below ‘normal’ levels of 90,000 to 95,000 per year.
The upward trend is also reflected in total sales across the main centres (5 per cent) and provincial markets (3.6 per cent) over the 12 months to January.
“Arguably, listing levels have returned to some kind of normality now, so the reduced sales over the past month probably hints at some uncertainty around buyer demand, rather than a lack of choice,” Mr Davidson said.
According to CoreLogic, national property value gains eased in January, with a rise of 0.4 per cent.
Main centres Dunedin and Tauranga slightly outperformed with other markets recording flatter results for the past month.
New listings activity has started to rise back again after the holiday period, with 8916 new listings over the four weeks ending 11 February, well below the 8577 from the same time last year and the five-year average (11,428).
While the total stock on market is 36,802, which is 8 per cent below this time last year.
Rental growth is still running at historically high levels, and was 6.8 per cent in the year to January – well above the long-term average growth rate of 3.2 per cent, and reflects further growth in wages, as well as a tightening supply and demand balance.
Mr Davidson said the sales market could see a rebound in February, given that January was perhaps weaker than expected.
“It’ll be interesting to see how sales and listing activity evolves in the next month or so, and how market confidence moves too,” he said.
“We suspect the demand would be there to match any additional supply coming onto the market, resulting in an associated rise in agreed sales activity as buyers can see more choice.”
