Trouble ahead! The property market is already slowing as the year begins,2022: can house prices still roar higher in the Year of the Tiger?

The latest New Zealand housing market data from property website realestate.co.nz shows that 19897 residential properties were for sale at the end of January this year, a striking 29% increase on the same time last year. This is the website’s highest stock of properties for sale at the start of a year since 2019, suggesting last year’s listing shortage has eased considerably. New listings also continue to increase. In January, realestate.co.nz received 7912 new listings, just 136 fewer than the 8048 received in January last year. This puts new listings for January at their second-highest level since 2016.

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Compared with the start of last year, the largest increases in total property stock were in Manawatu/Wanganui (+121%), Wellington (+112%) and Wairarapa (+105%). In absolute terms, Auckland still has the country’s largest housing stock: at the end of January, 8494 residential properties were for sale across greater Auckland, up 23% from January 2021. Realestate.co.nz’s average unadjusted asking price figures for Auckland show that after peaking at NZ$1003413 in November last year, the average fell to NZ$938136 in December, before rebounding to NZ$985846 in January this year. This suggests last year’s frantic price rises may be over. Asking prices remain high, but the market has stabilised.

Similarly, OneRoof-Valocity has just released its latest house price survey data. Over the three months to the end of January, New Zealand’s average property price rose 5.9%, or NZ$61,000, to NZ$1,098,000. Although prices remain strong, growth has begun to slow in almost every region, suggesting new lending rules and rising numbers of new listings may already be having a positive effect on the housing market.

Its quarterly figures show the strongest price growth in Northland (+6.9% to NZ$883,000), Canterbury (+6.7% to NZ$776,000) and Auckland (+6.5% to NZ$1,576,000). Following them, growth of 5.1% pushed Tasman’s average to the NZ$1,000,000 mark. Waikato also recorded an increase of 6.4% to NZ$986,000. The West Coast remained New Zealand’s most affordable region, with an average property price of NZ$389,000. Marlborough had the country’s slowest price growth, rising just 4.1% over the quarter to NZ$788,000.

Among New Zealand’s major cities, Auckland stood out, particularly its Franklin and Rodney districts, where average prices rose 9% and 7.9% respectively. However, average price growth is slowing in several major high-priced centres. Auckland’s growth rate fell from 10% in the previous quarter to 6.2%. Queenstown recorded quarterly growth of 6.15%, taking its average to NZ$1,764,000, followed by Tauranga (+5.7% to NZ$1,230,000) and Hamilton (+5.4% to NZ$931,000). Wellington (+4.6% to NZ$1,303,000) and Dunedin (+4.1% to NZ$756,000) lagged behind. Rotorua had the lowest growth among the major regional centres, at just 0.1% for the quarter.

So what do slowing sale price growth and a sharp increase in homes for sale mean for New Zealand’s housing market? Let’s hear what property industry professionals have to say.

Real Estate Institute acting chief executive Rowan Dixon said rising listing numbers were good news for buyers, offering more choice in a competitive market.

“If new listings continue to rise, we may see the balance of supply and demand begin to shift, potentially easing price pressure over time. However, demand remains strong, and after a prolonged supply shortage, more listings will begin to meet that existing demand.”

Dixon said there were reports of changing buyer sentiment, with buyers less willing to pay current prices. However, this could reflect tighter lending criteria, rising interest rates and new investor tax policies rather than increased listings.  

Ray White chief operating officer Daniel Coulson said it was important to remember that the increase in new listings followed record-low stock levels. The total number of homes for sale nationwide was currently just under 17,000, he said, well below the numbers five or 10 years ago. Realestate.co.nz data shows average stock of 24,353 in 2017, compared with 48,825 in 2012.

“So yes, more properties are coming onto the market, and towards the end of last year, new listings in most markets appeared to be increasing at a reasonable rate. But those figures are nowhere near the highest stock levels the market has seen,” he said. If demand remained steady or fell while supply continued to increase, many potential sellers’ fears that they would be unable to buy another home after selling would begin to ease. “That will encourage them to list, relieving market pressure. We could instead have a more balanced market, which benefits everyone by allowing buyers and sellers to make considered, rational decisions.”  

Harcourts managing director Bryan Thomson said that after two years of short supply, during which homes for sale were snapped up immediately, rising new listings were eagerly anticipated by both buyers and sellers. Last year, he said, buyers had to snap up whatever properties they could find, while sellers were reluctant to list for fear they could not buy another home at the same price.

“Now, more listings are encouraging people to put their own properties on the market, creating more choice and less competition among buyers. There is every reason to believe more new listings will come onto the market, and greater supply generally brings more transaction activity.”

This means the property market is unlikely to grind to a halt, despite tighter lending conditions. But Thomson said the effect of more properties for sale on house prices remained unknown. “Although many people consider mortgage rates high, they remain low by historical standards. A strong labour market gives people confidence to invest, and property has always been one of their preferred investment options.” “My view is that prices will not rise at the rapid pace of the past two years, but I do not think they will fall as far as many people predict either.” Although Canterbury has seen sharp falls in both homes for sale and new listings, its market outlook still warrants attention.