House sales are still a long way below the normal levels, says CoreLogic. File photo. Photo: RNZ / Nate McKinnon
The housing market is seeing a modest recovery in sales volumes, although prices are flattening out with listings at elevated levels.
The CoreLogic NZ June Housing Chart Pack shows that a 9.2 percent annual increase in sales activity in May was still significantly below normal sales volumes.
CoreLogic NZ chief property economist Kelvin Davidson said sales activity increased for the 13th consecutive month in May to 6789 transactions. However, the number of deals being done remained subdued.
"At 73,181 deals in the past 12 months, sales are still a long way below the normal levels of about 90,000 per year," he said.
"This relatively quiet market in terms of sales activity means new listings coming to market are adding to the overall inventory, putting buyers in the box seat when it comes to negotiating prices."
Total stock was 16 percent higher than the same time last year and nearly 28 percent above the five-year average.
"New listings activity has been solid although not spectacular so far in 2024, and it would appear that some 'pent up' reluctance to list in the final few months of last year is now coming forward and turning into available stock this year," he said.
First home buyers continued to represent 25 percent of purchases helped along with lower house prices, less competition from other buyer groups, a KiwiSaver for the deposit, as well as access to low-deposit finance at the banks.
Relocating owner-occupiers, with a 26 percent share of purchases, were starting to show signs of a small comeback
"Movers were relatively quiet during the pandemic years, possibly due to a lack of choice in available listings and reliance on conditionals offers, usually related to requiring finance or needing to sell prior," Davidson said.
"Now that listings have lifted and there's greater choice in the market, it's possible owner-occupiers are acting on that pent-up demand due to need or want."
He said regulation and rule changes remained a key theme in the property market.
"In an environment where mortgage rates remain high and aren't set to fall materially for a while yet, this year remains pretty underwhelming for the property market, despite a raft of policy changes," he said.
"Data suggests that values have been losing momentum since March and the patchy recovery that many areas of New Zealand had been experiencing has slowed, or in some cases reversed."
Davidson said the market's recovery over 2023 was largely due to a resilient labour market and strong net migration, which had passed its peak.
"The more recent loss of momentum is a reflection of prolonged affordability pressures, persistent high mortgage rates, an increase in listings on the market, and a turning point for unemployment," he said.
"Tax cuts and a loosening in the LVR rules are unlikely to make a material impact on transactions or prices given we're in an environment where mortgage rates remain high."