The New Zealand Property Report: May 2024 - Economic Headwinds Fail To Shake NZ Property Prices: What's The Secret?

• Property boss says it could be an advantageous time to transact – have we hit bottom? 
• Wellington price fall – is nervousness around job security to blame?
• Plenty of stock available: what it means 

Despite strong economic headwinds, New Zealand's property prices have remained stable. The latest real-time data from realestate.co.nz shows that the national average asking price has remained almost unchanged for nearly a year and a half, fluctuating between $860,000 and $890,000 since November 2022. 

Sarah Wood, CEO of realestate.co.nz, says that while this may be surprising to Kiwis facing high inflation, rising living costs, and restrictive interest rates, the answer lies in the alignment of supply meeting demand: 

"Both stock levels (supply) and the number of property seekers visiting realestate.co.nz (demand) has increased year-on-year. This confirms the laws of economics, where price stability is achieved when supply and demand are matched." 

“Eighteen months ago, we saw a shift from a fear of missing out (FOMO) to a fear of overpaying (FOOP). Since then, things have stabilised. Over the past year and a half, we've experienced a remarkably consistent market.” she adds.

Graph: Active users and total stock have aligned while the national average asking price remains flat.

Property boss suggests it could be an advantageous time to transact

Reflecting a balancing of supply and demand, most regions saw minimal fluctuations in average asking prices last month. Our most populated region, Auckland, saw average asking prices dip year-on-year by 1.6% to $1,062,110 during May. Similarly, our national average asking price dipped by 1.6% year-on-year to $859,301. 

According to Wood, whether we are at the bottom of the market remains to be seen: 

“We can say that it has absolutely been a flat market for almost a year and a half. Thanks to this stability, it's an advantageous time to transact because homeowners have a better chance at predicting property values when selling and buying."

Despite this relative stability, some regions bucked the trend.

The West Coast was the only region to hit an all-time asking price high last month. Reaching $554,877, this is the first time in 17 years of data that the region’s asking price has been above $550,000. The West Coast saw the biggest increase of all 19 regions during May, rising by 21.4% year-on-year. It maintained its position over Southland, which has the lowest average asking price in the country for the second month in a row.

Conversely, Wellington and Central North Island saw average asking prices fall year-on-year during May. However, Wood explains that Central North Island is an anomaly, having seen an unusually high average asking price in May 2023.

Wellington price fall – are job security fears to blame? 

Wellington's average asking price fell by 14.1% year-on-year during May to $739,497. This is the first time since November 2020 that the average asking price in the region has been below $800,000.

Wood suggests public sector redundancies and a general tightening of the job market could be creating a sense of nervousness and prompting homeowners to price their properties more competitively to get the sale done:

“When the market is softer, price becomes the primary lever for sellers wanting to move their properties more quickly. Unlike other factors such as location or property size, price can be adjusted.”

Like the rest of the country, average asking prices in Wellington have been flat over the last 12 months to April. “It will be interesting to see whether May data is a sharp dip or if prices will remain low during June,” says Wood. 

Plenty of stock available: what it means 

Year-on-year, stock was up nationally and in all except two regions last month. The biggest year-on-year increases were in Marlborough (up 37.8%), Wellington (up 31.9%), Coromandel (up 30.4%), and Northland (up 30.2%). Significant increases were also seen in Auckland (up 27.9%), Hawke’s Bay (up 26.4%), and Wairarapa (up 25.3%). Nationally, stock levels rose by 22.2%.

Stock has remained high throughout 2024, reflecting levels last seen in 2015, when stock also hovered around 30,000 properties.

"For buyers, increased stock levels mean more options and possibly better bargaining power. For sellers, heightened competition requires careful pricing strategies, optimal property presentation and a good marketing strategy to stand out from the crowd."

She notes that it’s always best to seek advice from your local real estate agent. 

Bucking the trend, Gisborne and the West Coast saw stock levels decrease by 3.3% and 7.7%, respectively. However, Sarah Wood, CEO of realestate.co.nz, explains that the Gisborne market is small and prone to fluctuations: “I would consider this a fairly minor shift, perhaps even stable in the context of this local market.” 

“The West Coast, however, is another clear demonstration of supply and demand in action. Our search data shows active users searching in this region were up 31.7% year-on-year while stock was down. This mismatch likely contributes to this region's 17-year all-time asking price high.”

Glossary of terms: 

Average asking price (AAP) is neither a valuation nor the sale price. It is an indication of current market sentiment. Statistically, asking prices tend to correlate closely with the sales prices recorded in future months when those properties are sold. As it looks at different data, average asking prices may differ from recorded sales data released simultaneously. 

New listings are a record of all the new residential dwellings listed for sale on realestate.co.nz for the relevant calendar month. The site reflects 97% of all properties listed through licensed real estate agents and major developers in New Zealand. This description gives a representative view of the New Zealand property market. 

Stock is the total number of residential dwellings that are for sale on realestate.co.nz on the penultimate day of the month. 

Inventory is a measure of how long it would take, theoretically, to sell the current stock at current average rates of sale if no new properties were to be listed for sale. It provides a measure of the rate of turnover in the market. 

Seasonal adjustment is a method realestate.co.nz uses to represent better the core underlying trend of the property market in New Zealand. This is done using methodology from the New Zealand Institute of Economic Research. 

Truncated mean is the method realestate.co.nz uses to supply statistically relevant asking prices. The top and bottom 10% of listings in each area are removed before the average is calculated to prevent exceptional listings from providing false impressions.                  

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