Activity remains subdued as rising interest rates cause further hesitancy - REINZ stats November 2022

Rising interest rates, access to finance and concerns around the economy have created uncertainty in the market. Across Aotearoa New Zealand, market activity through spring has been subdued and median prices continue to soften as buyers remain hesitant

The number of residential property sales across New Zealand decreased annually by 36.1%, from 8,644 in November 2021 to 5,525 in November 2022. Month-on-month, there was an increase of 7.7%.

Jen Baird, Chief Executive at REINZ, comments: “When looking at the November figures, we’re comparing a market at its peak with one that has moderated over the past 12 months.

“In a recent survey of REINZ membership, conducted with economist Tony Alexander, real estate professionals reported the top concerns of buyers in the market are high interest rates, access to finance and purchasing and seeing prices soften. Add to these concerns of recession, global economic and geo-political uncertainty.

“In late November, the Reserve Bank of New Zealand (RBNZ) raised the OCR by a record 75 basis points to 4.25%. The central bank also forecasts a peak of 5.5% next year and predicts a further rise in inflation. The immediate effect on the real estate market was more hesitancy.

“Buyers are again weighing up the likely impact on mortgage rates with current downward pressure on property prices. Those thinking of selling are again looking at the market and asking, ‘Is this the right time?’

“For many it is the right time. In November, people continued to transact — 5,525 according to our sales count,” Baird says.

The regions with the greatest annual percentage decrease were:

• Gisborne, which decreased 45.2% annually from 62 to 34

• Auckland, which decreased 43.5% annually from 3,182 to 1,797

• Manawatu/Whanganui, which decreased 39.1% annually from 414 to 252

• Wellington, which decreased 36.2% annually from 870 to 555.

Regional Analysis - Northland

“The median price in Northland decreased 2.7% annually to $729,500. Rises in interest rates are causing the most concern among buyers — many are still hesitant, slowing the pace of sales in Northland. In November, the number of sales decreased by 20.9% annually.

“Owner occupiers with equity remain the most active buyer pool — unlike first home buyers, they are not reliant on bank approval. Genuine vendors are adjusting their price expectations; however, some are still hanging on to last year’s appraisal values.

“Northland’s market is still experiencing an excess of supply over demand and local salespeople expect this to be the case throughout the summer period.” (REINZ)

The current Days to Sell of 54 days is more than the 10-year average for November which is 45 days. There were 49 weeks of inventory in November 2022 which is 31 weeks more than the same time last year.

Regional Analysis - Auckland

"The City of Sails is also known for its expensive house prices — even after a year of easing prices, its median price continues to surpass $1 million. In November 2022, Auckland’s median house price was $1,065,000, an 18.1% decrease on the market’s peak in November 2021.

The central city has seen considerable growth over the last decade, with many new apartment buildings now gracing Auckland’s downtown skyline. While the current economic conditions have seen many central city developers pull back from their plans to build in the short term, once the market cycle turns back toward growth, Auckland’s vibrant centre will surely see more cranes and more opportunity for buyers." (REINZ)

The current Days to Sell of 40 days is more than the 10-year average for November which is 34 days. There were 29 weeks of inventory in November 2022 which is 15 weeks more than the same time last year.

Regional Analysis - Waikato

“Waikato saw its median price decrease 7.4% annually to $789,000. In Thames and Taupo, owner occupiers were most active in the market over the month. Buyers requiring finance were sparse and Taupo salespeople reported a decrease in overseas buyers and investors.

“Rises to mortgage rates and the concern they will increase further has meant some buyers are no longer able to afford properties they could previously or are conditional for longer periods of time.

“Vendors now understand the changes in the market. However, Taupo salespeople say the rateable values in the Taupo District just released have increased, which may mean vendors take longer to adjust their price expectations.” (REINZ)

The current Days to Sell of 46 days is more than the 10-year average for November which is 36 days. There were 32 weeks of inventory in November 2022 which is 22 weeks more than the same time last year

Regional Analysis - Bay of Plenty

“In November, Bay of Plenty’s median price decreased 3.7% annually to $857,000. Salespeople in Rotorua say that owner occupiers and developers have been the most active in the market. In Tauranga, owner occupiers are dominant in the market, with first home buyers also active.

“Open homes have been quiet —largely due to current market conditions and economic uncertainty. Buyers are finding it difficult to obtain finance in time, and some have indicated placing a hold on their buying plans until the new year.

“There is still a steady number of listings entering the market, but no sign of the usual spring flurry in market activity. Local salespeople say that until economic conditions improve, they don’t expect a significant increase in buying and selling activity.” (REINZ)

The current Days to Sell of 44 days is more than the 10-year average for November which is 40 days. There were 26 weeks of inventory in November 2022 which is 17 weeks more than the same time last year.

Regional Analysis - Gisborne

“The median price in Gisborne decreased by 3.6% annually to $660,000. Gisborne’s market in November saw owner occupiers remain active but a decrease in investors, largely due to interest rates. Vendors now realise they need to meet the market today or accept less later.

“November saw more people attend open homes — local salespeople said there was an increase of cashed-up buyers. Auctions also saw satisfactory attendance though clearance rates eased.

“According to Gisborne salespeople, the market has shifted to the buyers’ end of the spectrum. Able buyers have the luxury of time and are waiting for that perfect property to pop up.” (REINZ)

The current Days to Sell of 41 days is more than the 10-year average for November which is 36 days. There are 13 weeks of inventory in November 2022 which is 5 weeks more than last year.

Regional Analysis - Hawke's Bay

“The median price in Hawke’s Bay decreased by 17.2% annually from $830,000 in November 2021 to $687,500 in November 2022.

“All buyer segments appear to have taken a step back, and vendors have lowered their price expectations accordingly. Open home attendance was down, and sales activity decreased 29.6% annually. The factors having the most significant impact on the market are rising interest rates and a fear of a looming recession. Salespeople in Hawke’s Bay expect market activity to remain subdued into the new year.” (REINZ)

The current Days to Sell of 54 days is much more than the 10-year average for November which is 37 days. There were 20 weeks of inventory in November 2022 which is 11 weeks more than the same time last year.

Regional Analysis - Taranaki

“Median prices in Taranaki have remained relatively stable year-on-year — seeing a 1.0% decrease to $620,000 in November. According to salespeople in Taranaki, the majority of offers received have been subject to the sale of another property.

“November saw an increase of activity from retirees, likely due to the greater variety of homes on the market, improvement of the weather, and the completion of several elderly living complexes in the region. There was also strong enquiry from buyers outside of Taranaki.

“Attendance at open homes improved throughout the month, and agents expect this to continue through summer. However, there is little urgency from buyers, and buyers and vendors feel uncertain about where the market is heading in 2023. And how high interest rates may get — a pressing concern for most buyers and current homeowners.” (REINZ)

The current Days to Sell of 36 days is more than the 10-year average for November which is 33 days. There were 19 weeks of inventory in November 2022 which is 12 weeks more than the same time last year.

Regional Analysis - Manawatu/Whanganui

“Manawatu/Whanganui saw its median price decrease 8.2% annually to $574,000 this November. There was a decline of first home buyers in the market largely due to increases in the Official Cash Rate and rising interest rates. Investors have taken a step back for similar reasons in conjunction with loan-to-value ratios and tax legislation.

“We are seeing more and more vendors become accustomed to the current market — those who are serious about selling are meeting the market. In November, sales counts decreased by 39.1% annually. Salespeople predict that sales volumes will stay soft over the holiday period.” (REINZ)

The current Days to Sell of 50 days is more than the 10-year average for November which is 34 days. There were 25 weeks of inventory in November 2022 which is 15 weeks more than the same time last year.

Regional Analysis - Wellington

“The median price in Wellington decreased 17.4% annually to $795,000 in November. Whilst there are fewer buyers actively in the market, salespeople report an increase in first home buyers looking again.

“Vendors are still hoping that the market will improve, which is reflected in their price expectations. Open homes and auction rooms were quiet throughout November, and buyers continue to fear a potential fall in value if they buy now.” (REINZ)

The current Days to Sell of 41 days is more than the 10-year average for November of 31 days. There were 13 weeks of inventory in November 2022 which is 6 weeks more than the same time last year.

Regional Analysis - Nelson/Marlborough

“Median prices in Nelson, Marlborough and Tasman decreased 4.9%, 0.7% and 0.1% annually to $700,000, $700,000 and $869,500 respectively. In November, open homes were quiet in Marlborough, with most attendees being local.

“In Nelson, while interest from most buyer segments has eased off, those looking to downsize are a strong presence in the market. Consumer confidence is low due to fear of a recession, rising interest rates and lending criteria restrictions impacting many buyers. Sales counts declined in all three regions in November for these very reasons.

“However, Nelson continues to attract people far and wide over summer who want to enjoy the lifestyle the region offers. Local salespeople are hopeful this may increase market activity over summer.” (REINZ)

The current Days to Sell of 45 days is much more than the 10-year average for November which is 32 days. There were 24 weeks of inventory in November 2022 which is 16 weeks more than the same time last year.

Regional Analysis - West Coast

“In November, the median price in the West Coast bucked the national trend, increasing by 20.0% annually to $420,000 — a new record high. The Buller District also reached a record median price of $420,000. In saying this, due to the West Coast’s typically small sample size, its data can be volatile.

“West Coast salespeople say that with a fine summer forecast and the return of more overseas tourists already evident, there are hopeful signs of increased market activity. Properties sold slightly faster than this time last year — the median days to sell was down one day on November last year. However, sales counts decreased by 15.0% annually.” (REINZ)

The current Days to Sell of 32 days is much less than the 10-year average for November which is 66 days. There were 31 weeks of inventory in November 2022 which is 7 weeks more than the same time last year.

Regional Analysis - Canterbury

“Canterbury’s median price decreased 3.2% annually to $668,000 in November. In Timaru, Ashburton and Christchurch, owner occupiers were most active in the market. Open home attendance was quieter across the board — many buyers are concerned about further interest rate rises and the cost of living.

“The days a property spends on a market is longer for those that don’t meet market price at campaign stage, so it’s increasingly important for sellers to understand their local market conditions. The median days to sell increased seven days annually from 26 days in November 2021 to 33 in November 2022. Buyers still fear prices falling after they have bought so there remains a continuing sense of uncertainty which is causing hesitation in the market and slowing the pace of sales.” (REINZ)

The current Days to Sell of 33 days is more than the 10-year average for November which is 30 days. There were 17 weeks of inventory in November 2022 which is 9 weeks more than the same time last year.

Regional Analysis - Otago

Dunedin: “Dunedin’s median price decreased by 7.7% annually to $600,000 this November. There is a feeling of economic uncertainty evident in the market caused by rises in interest rates and a fear of a recession which is causing hesitancy for some buyers. The median number of days to sell increase by 10 days annually with buyers taking their time to make decisions now that there is more choice available.

“Sales activity was subdued over November — decreasing by 28.4% when compared to November last year but properties that are priced realistically are still generating interest with some receiving multiple offers still.” (REINZ)

Queenstown: “In November, the median price in the Queenstown-Lakes District was 9.8% up on this time last year to $1,350,000. Owner occupiers remain the most active pool; however, many buyers are hesitant, believing prices will fall further.

“New and well-marketed properties have attracted good interest and open home attendance, but for properties that have been on the market for a while, open home attendance was light. Auctions performed well over November — they remain a successful method of sale in the Queenstown-Lakes District, albeit with a lower attendance compared to this time last year.

“Sellers understand the shift in market sentiment and are willing to be more flexible with their expectations on price.” (REINZ)

The current Days to Sell of 38 days is more than the 10-year average for November which is 31 days. There were 17 weeks of inventory in November 2022 which is 7 weeks more than the same time last year.

Regional Analysis - Southland

“Southland’s median price increased 10.5% annually to $475,000 in November — an equal high to February 2022. Two districts also achieved record median prices: Gore District ($435,000) and Invercargill City ($485,000).

“Owner occupiers were an active buyer segment, whereas first home buyers and investors have tapered off. Vendors are adjusting their price expectations to meet the market. Sales counts continue to ease due to further increases in the Official Cash Rate and rising interest rates. In November, the volume of sales decreased by 36.1% year-on-year.” (REINZ)

The current Days to Sell of 30 days is more than the 10-year average for November which is 28 days. There were 22 weeks of inventory in November 2022 which is 12 weeks more than the same time last year.