As buyers return to the market they are putting upwards pressure on property prices as listings dip, the latest CoreLogic Housing Chart Pack shows.
Residential sales rose 17% in the 12 months to June, hot on the heels of the 8% annual bump in May, while the flow of new listings coming on to the market each week has remained sluggish month-to-month. The figures show new listings down -30.8% in the four weeks to 2 July.
Sales volumes up
CoreLogic chief property economist Kelvin Davidson says two consecutive months of improved activity, measured across agent deals and private activity, is a strong indication sales volumes are bottoming out.
He says the increase is starting from a low base, but as pent-up demand starts to emerge it is likely sales will increase during the remainder of this year.
An improvement in sales volumes, says Davidson, reflects the broad peak in mortgage rates, the ongoing strength of the labour market, high net migration, and slightly looser credit rules – as well as a tentative change in house-buyer confidence.
Listings remain almost 25% below the previous five-year average, says Davidson.
“With the weekly flows of new listings coming on to the market still running at low levels, this early upturn in sales is now eating into the total stock of listed property, especially in key areas such as Auckland, Bay of Plenty, and Wellington.
“Would-be vendors are choosing to ‘wait and see’, given the uncertainty about how long a sale might take and/or the potential price achieved,” he says.
“Arguably it remains a ‘buyer’s market’, with the national total stock of listings on the market still relatively high. However, there is also a downwards trend now evident for stock levels too, which may start to contribute to competitive price pressures.”
This month’s CoreLogic House Price Index shows the decline in values nationally accelerated to 1.2% over the month, taking the annual downswing to 10.6% in the year to June.
Still, Davidson says the trend isn’t unusual, given the natural lag between sales and prices. And the second half of the year is likely to hold some kind of housing market upturn.
“The end of the downturn doesn’t necessarily mean the market is destined for a sharp rebound,” he says.
“Housing affordability is still stretched, and caps on debt-to-income ratios loom large next year.”
The second half of the year still looks likely to hold some kind of housing market upturn – which will be good or bad, depending on your perspective, Davidson says.