Buyer-seller stalemate leads to ‘lowest home sales since GFC fallout’ – CoreLogic

A buyer-seller stalemate led to monthly house sales in January falling to the lowest since the fallout from the global financial crisis, said Nick Goodall, head of research at CoreLogic.

There were 4,113 residential property sales in the first month of the year, the lowest number in over a decade, except for April 2020 when a nationwide lockdown reduced sales to 1286, said Goodall.

The month with the lowest sales before that had been January 2011, when sales fell to 4,072, likely due to continued fallout from the global financial crisis in 2008, he said.

He attributed the crisis to the fact that New Zealand was in a “transitional market”, where sellers were still expecting record prices, and buyers were unwilling or unable to pay them.

CoreLogic's Nick Goodall says that during a hot market, up to a fifth of sellers might choose to sell privately, as happened in 2005.

Provided

CoreLogic’s Nick Goodall says that during a hot market, up to a fifth of sellers might choose to sell privately, as happened in 2005.

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A combination of a glut of properties on the market, worsening economic conditions and a squeeze on home loans narrowing the pool of buyers was likely to see buyers win the stalemate, Goodall said.

New home listings were seasonally normal for the time of year, CoreLogic data showed, but properties remained unsold longer.

Figures from the Real Estate Institute (Reinz) confirm CoreLogic’s findings, with residential property sales falling by almost a third in January.

“Looking at the seasonally adjusted numbers, we noted a 5.3% decline as we move from December to January, indicating that sales volumes were lower than usual,” the manager said. general of Reinz, Jen Baird.

Real estate agents were expected to talk to sellers about the changing supply and demand situation, as well as the difficulties buyers are having in obtaining home loans.

Baird said she expects sales to pick up in February and March.

February sales data was not yet available, but Baird said early indications suggested headwinds building up in the market were keeping sales down.

“Reports from agents nationwide suggest access to finance is increasingly the top concern for buyers, particularly since changes to the Credit Agreements and Consumer Credit Act in December. “, she said.

Baird said Kiwis have gotten used to the market in a way, but the industry has seen a change of pace over the past two months.

The Real Estate Institute's chief executive, Jen Baird, said estate agents were letting clients know the market had changed.

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The Real Estate Institute’s chief executive, Jen Baird, said estate agents were letting clients know the market had changed.

More sellers going through agents

Goodall said the proportion of sellers using estate agents was on the rise, which was usually a sign of falling prices as the seller sought professional help to get the best price.

Typically, between 12 and 17% of sellers sold privately. That figure had fallen to 10%, which Goodall said was near an all-time low.

Omicron and the red light setting disruption may also play a role in slowing sales if agents and other parties fall ill, he said.

New home listings are down this year from the previous two years.  Source: CoreLogic

New home listings are down this year from the previous two years. Source: CoreLogic

“It could also be that we have gone through a solid construction phase,” he said.

Other building permits had been filed and other houses were being built. “So this responds to a request that would have been to search for existing properties.”

Data for February had not yet been processed, but he expected to see a slight recovery in sales as more sellers acclimated to the new market.

Figures from Barfoot & Thompson suggest the recession is continuing, signaling that the Auckland housing market cooled further in February, with prices and sales falling sharply.