REINZ reports promising signs for property market
Research from the property industry’s peak body, the Real Estate Institute of New Zealand’s (REINZ) shows an increase in sales counts in some parts of the country in May.
REINZ Chief Executive Jen Baird says as we head into the winter months, we are seeing glimpses of positivity, especially in the regions following the Reserve Bank’s announcement of easing loan-to-value restrictions and the stabilising of interest rates.
“It’s clear that current high interest rates combined with a tight economy, are still influencing the market as buyers continue to act with caution while economic headwinds play out. This month median prices eased at a slower rate and sales counts are marginally down compared to May 2022. Seven regions increased in sales counts, an indicator of returning market confidence,” adds Jen Baird.
According to the REINZ, the national median price decreased 8.2% year-on-year to $780,000 in May but significantly, there was no change month-on-month. In the regions, Nelson had the biggest median price rise in May at 2.7% year-on-year and 6.9% month-on-month to $770,000.
The West Coast saw another increase with a month-on-month rise of 3.1%. Two districts reached record median prices: Grey District with a 18.7% increase year on year ($400,000) and Waitomo District taking top spot with a 53.4% increase year on year ($655,000).
At the end of May, the total number of properties for sale across New Zealand was 26,685, up 250 properties (0.9%) year-on-year, and down 6.8% month-on-month.
“Inventory levels look to have stabilised with only a slight increase in stock levels. We have seen low levels of property coming to market across the country for much of this year and, as sales volumes are back at more normal levels, we may be seeing the beginning of a shift in the balance of supply vs demand,” says REINZ’s Jen Baird.
The total number of properties sold across New Zealand in May 2023 was 5,752, down from 5,776 in May 2022 (-0.4%), and up 30.0% month on month. New Zealand, excluding Auckland, sales counts increased by 1.4% year-on-year and 26.7% month-on-month.
Jen Baird continued, “We’ve heard from salespeople that most sellers are meeting the market while others are potentially holding tight on selling at a higher sale price, particularly if they had bought in the peak of the market. These tend to be the properties that stay on the market longer. Easing of loan-to-value restrictions, commentary around peak inflation and a renewed confidence is seeing more first home buyers seek out opportunities.”
According to Keith Niederer, Network Manager NZ at Raine & Horne, the research from the Real Estate Institute of New Zealand (REINZ) indicates a positive shift in market sentiment.
He commented, "As we venture further into winter, we are witnessing glimpses of positivity, especially in the wake of the Reserve Bank's decision to ease loan-to-value restrictions and the stabilisation of interest rates.
“While economic headwinds still impact the market, buyers are acting cautiously due to high interest rates and a tight economy. However, with some regions experiencing an upturn in sales counts, it serves as a promising indicator of market confidence."
Keith adds that the rising costs of building materials and labour is making the established home market look even more affordable for prospective buyers. “Buyers realise that they couldn’t build some of the homes they’re inspecting because of rising costs.
“Therefore, it is a great time to buy an established property right now, and for those sitting on the fence, it’s essential they realise that quality, well-located properties will not get any cheaper than they are currently.”