A switch to a ‘buyer’s market’ is on the cards for New Zealand during the second half of 2022, according to CoreLogic’s latest Market Pulse.
But buyers might have to work a little harder to secure finance, according to CoreLogic NZ Chief Property Economist Kelvin Davidson.
“For some time now, the tight supply of listings on the market, set up against strong demand fuelled by low mortgage rates and abundant credit availability, has been a factor pretty much right across the country, pushing up property values sharply,” Mr Davidson said.
“The lack of choice for buyers has created the ‘FOMO’ (fear of missing out) effect and it’s certainly put the power in the hands of property sellers.
“The mechanics for this have been a reduced new flow of listings, mostly due to the various lockdowns, but continued high levels of achieved sales at the other end of the pipeline, which have combined to slowly dwindle away the available stock on the market.
“One important point to note is that new listing flows have fallen away during lockdowns and then recovered quickly – but only back to ‘normal’ levels, which haven’t really made up for the previous decline.”
Over the past few months though, listing levels had become much clearer, as new flows had recovered and achieved sales had dipped, Mr Davidson said.
“Indeed, since the recent trough, the total stock of listings has risen by almost 40 per cent, and is now back up to the highest level since March,” he said.
“To be fair, that’s still a low level. But the gap to where they were at the same time in previous years is nevertheless steadily closing.
“It’s conceivable that by the end of the year, listings will have recovered to where they were (or even above) at the end of 2020.”
Mr Davidson said the turnaround for total listings wasn’t a universal trend, but was clear to see in some of the main centres – notably Dunedin and Wellington, and to a lesser extent in Hamilton, where listings were now back above the levels that prevailed at the same time in 2019 and 2020.
“There have already been signs of property values faltering a little in Dunedin in recent months, so more choice for buyers could see that evidence of softer price pressures become much clearer, as well as spreading to parts of Wellington too,” he said.
“But as noted, some areas are still tight. Take Queenstown for example, where although total listings have also begun to rise, they’re still pretty low compared to the past few years.
“As always, whichever point of the cycle we’re in, different drivers are at different levels depending on location.”
Mr Davidson said it might not become a buyer’s market overnight, with some vendors sticking to price expectations, which may lead to longer listings, or listings being withdrawn altogether.
“However, as mortgage rates rise and credit conditions tighten, some vendors may eventually just have to cave in and ‘meet the market’,” he said.
