REINZ reports mixed results for housing market in October (Source)

October sales data from The Real Estate Institute of NZ (REINZ) suggest the market had a reasonable spring tailwind ahead of the busy summer season.

REINZ reported 6681 residential sales across the country in October, up 10% on September. Additionally, the national median selling price rose to $795,000 (up 1.9% on September).

Yet, this article on interest.co.nz drills further into the data to find that taking into account seasonal adjustments, comparisons with other indicators and a 7.7% increase in new stock levels, activity was more subdued than it seemed at first glance. It seems that while the market is warming over spring, as it usually does, it is not running away in leaps and bounds.

OUR VIEW: It was reported last week that there were a number of new builds that reached the market recently, bolstering stock levels. This means there is a lot of choice available for those looking to buy. It also means it is still a buyer’s market. However, prices are rising and once stock levels start to decline historically, we see prices start to rise due to buyers competing over properties. In addition to this, there is also another OCR announcement later this month. It has been reported that a further OCR drop of 50bps is expected and from this we may see interest rates drop further allowing more buyers to enter the market as mortgage rates become more affordable.

 Auckland property price loss rate highest in a decade, CoreLogic reports (Source) 

It could be a seven year wait for people who bought a house at the peak of the market to not face a loss when they sell, CoreLogic has estimated in its latest ‘Pain and Gain’ report.

It shows 9.8% of people who sold an existing residential property in Q4, 2024, did so at a loss. In Auckland, the amount was much higher at more than 16%.

The median loss being made was $55,000 while those who made a gain made a median $269,000.

Across the country, properties that had sold for a loss had been held for almost three years, while in Auckland that median hold period was slightly longer at 3.3 years. Meanwhile, properties that sold for a profit had been held for a median 8.5 years.

CoreLogic’s chief property economist said the market had shifted in favour of buyers, which gave them more leverage in price negotiation.

Top national house builder drops staff numbers by 90 (Source) 

One of the country’s largest house builders, Classic Group, has cut 90 staff in the last 18 months, due to the downturn in the residential market. The cuts were across the board including project managers, marketing and drafting. High interest rates, material prices up 40% in three years, lack of land and high council costs were among the reasons it gave for why demand for new housing had dropped. While it used to build 700 - 800 houses a year, nationally, it was down to 350.

OUR VIEW: The fact that home builders are reporting a downturn indicates that in future there will potentially be a shortage of new build housing stock. This supports the view that next year house prices may increase as we see the shift from a buyer’s market to a seller’s market.

Australia housing crisis: The mix in property development is tilting towards detached houses, impacting long-term affordability. (Source) 

Across the Tasman, Australia’s Construction Industry Forum (ACIF) is forecasting a 6% increase in residential construction over the next two years (to AU$120.2 billion), but the increase is coming from detached houses, rather than new apartments and townhouses – a worrying turn for a country that needs higher density housing to address the undersupply of housing and to ensure long-term affordability.

According to ACIF Construction Forecasting chair Nerida Conisbee, it is very, very expensive to build apartments and detached housing is quicker and easier to build.

OUR VIEW: Apartment buildings provide a great solution for cities to accommodate many people, whereas the standalone housing is being built in fringe areas, meaning urban sprawl is taking place. Urban sprawl, although helpful and often favoured by families in particular, can put pressure on infrastructure so finding a solution to the cost of building apartments, medium rise and townhouse developments needs to be a priority.

Australian property market: Sydney house prices now falling in 40pc of all suburbs (Source) 

Also in Australia, there are more signs the housing outlook has dimmed with CoreLogic reporting house prices are now falling in 40% of Sydney suburbs. Melbourne also saw its share of suburbs where house values dropped in the last three months rise to 76.3%.

CoreLogic says the downturn has become more widespread as stock levels rose, borrowing capacity shrank and affordability worsened.

“Sydney is still in the early phase of the downswing, so we’ll probably see more suburbs where house prices drop in the coming months.” – CoreLogic. 

Have an enjoyable weekend!

From the team at Erskine Owen.