Housing inventory surges and days to sell reach a 16-year high?! This week’s key events for property investors

 

1

August housing market report: inventory surges and days to sell hit a record high

 

According to the latest data from the Real Estate Institute of New Zealand (REINZ), nationwide housing inventory surged 30% year on year in August, with 29,579 properties on the market. This increase gave buyers more choice, although the total was slightly lower than the 30,556 properties available in July, a decline of 977. REINZ also noted that the national median time to sell reached 50 days in August, the highest figure for August since 2008. The median time to sell increased by 8 days compared with the same period last year and by 1 day compared with July. According to Interest.co.nz’s historical records, since 1992 there have been only two instances of days to sell reaching or exceeding 50 in August.

 

REINZ chief executive Jen Baird said that despite an increase in listings and a shift in sentiment, it was too early to say the market was at a turning point. “In August, we saw further signs of changing market sentiment, with reports of increased confidence among sellers and buyers, investors returning, and a particularly notable increase in open home activity during the final two weeks of August.” Baird attributed the change to falling interest rates, but said these were only early signs and a genuine market shift remained to be seen.

 

2

House prices fluctuate slightly lower across most of the country

 

CoreLogic released its latest house price data last week, and it may not be good news for property owners. Put simply, the recent property market downturn has been widespread across the country: about 70% of the suburbs analysed—roughly 670 out of 950—recorded falls in median property prices over the three months to September. Around 175 suburbs saw declines of more than 2%.

 

Auckland suburbs experienced the sharpest falls, with house prices in East Tamaki, Northpark and Somerville all declining by more than 6%. Downward pressure on prices mainly stems from affordability concerns and buyer caution. The suburbs with the strongest price growth were generally in more affordable areas, with all five of the biggest gainers having median house prices below NZ$500,000. Cobden in Grey District recorded the largest increase, rising 22.6% over the quarter to NZ$313,000. Blaketown, also in Grey District, rose 15.9% to NZ$333,750.

 

Looking ahead, CoreLogic chief property economist Kelvin Davidson said lower mortgage rates would support house prices over the medium term, but the benefits of easier access to credit would take time to emerge. Several headwinds also continue to constrain the market, including stretched housing affordability, ample listings and, of course, a weak labour market.

 

3

Rent growth and inflation slow further

 

For net migration, the figure for month 7 (5310 people) was a relatively good result in itself, but it was not enough to prevent a further decline in the net migration total over the past 12 months. That figure has now fallen to around 67200 people. Although still high, growth is slowing rapidly. This has slowed overall population growth and reduced demand for property, particularly rental housing. A report from Stats NZ last week also confirmed this trend: rents rose just 1.4% in the year to August, the smallest increase since December 2022 (0.8%). Rents in the Wellington region rose just 0.4%, while Auckland rents fell 0.3%. This is good news for tenants, but less encouraging for landlords.

 

The rental data forms part of a broader set of price indices published by Stats NZ, covering around 45% of the benchmark quarterly consumers price index (CPI). The inflation measure for this portion rose only about 1% year on year, its lowest level in many years, providing further support for another official cash rate (OCR) cut on 9 October.

 

4

New Zealand’s economy has yet to show clear signs of recovery

 

Another major reason for an OCR cut is the economy’s continued weakness. The latest survey data shows that timely indicators such as manufacturing activity and electronic card retail spending are performing poorly, and more information will become available this week. For example, the New Zealand Activity Index will be released on Tuesday, and overall economic activity in August is likely to remain quite weak, following a weak June and a modest rebound in July. This provides further evidence that the OCR and mortgage rates may continue to fall.

 

5

Second-quarter GDP figures due soon

 

This Thursday, Stats NZ will release official second-quarter GDP figures, which are expected to show a quarterly decline of up to 0.5%. Although the release will attract widespread attention, we are likely to move on fairly quickly. After all, these figures are already relatively dated, covering April to June, and the Reserve Bank of New Zealand has already anticipated a fall in GDP. The latest data is therefore unlikely to significantly alter overall economic sentiment or expectations.