Following a rollercoaster of a few years, the housing market may have reached a turning point, new data suggests.
Average asking prices may have plateaued with prices remaining around the mid $800,000 mark, realestate.co.nz said.
Despite a slight increase in December 2022, realestate.co.nz data found average house prices have been steadily decreasing since its January 2022 peak and have remained flat for the past couple of months.
"Many expected a property market crash in response to COVID-19, but instead, average asking prices trended up consistently until the beginning of 2022 when other economic factors stepped into the driver's seat," realestate.co.nz spokesperson Vanessa William said.
"I suspect we may have reached a so-called 'bottom' of this trend or, at the very least, a turning point. But we will have to watch what happens in the coming months to know for sure."
The New Zealand Property Report released on Thursday by realestate.co.nz suggested the flatting might coincide with peaking rates following the Reserve Bank (RBNZ) hiking the official cash rate (OCR) for the 11th consecutive time last week.
Williams said high interest rates are one of the factors impacting the slow pace we've seen in the market recently.
"When the cash rate is high, finance becomes tighter, meaning some buyers have to reconsider their lending options. However, when the cash rate is low, finance is more readily available, and buyer confidence tends to create a bit of activity in the market," she said.
Managing director and head of lending for NZ Mortgages Nathan Miglani said they anticipate rates to gradually descend for late 2023.
"Some buyers believe that rates have already peaked, and they're making decisions based on the idea that rates will be going down," Miglani said in a statement.
His general advice is for home buyers to fix short-term where possible, say for a year or 18 months.
"With interest rates likely to fall, fixing for a long term could mean a hefty breakage cost if circumstances change and you need to restructure early," Miglani said.
Housing market conditions for May
The national average asking price in May was $866,696, only slightly below April which was $866,829.
While this is hardly a difference month-on-month, average prices for May were down 9.6 percent from the same time last year.
The majority of regions recorded a monthly increase in average asking prices. Meanwhile, all regions recorded a year-on-year decrease in price in May except for Central North Island (up 13.2 percent), Southland (up 3.1 percent) and West Coast (up 8.2 percent).
However, average asking prices still remain above pre-COVID levels. During the first lockdown in March 2020, the national average price was $707,233 while last month it was $866,696 (a 22.5 percent increase).
The number of new listings coming onto the market was at a 16-year low during autumn of this year - dipping almost to the same level we saw during the 2020 lockdown.
The combined total of new listings coming onto the market nationally during March, April, and May (autumn) this year was 23,743, down 18.2 percent from last autumn.
"This is only just above the 21,391 new listings that came onto the market during the same period in 2020 when restrictions, at times, meant vendors couldn't list their homes even if they wanted to," Williams said.
"We typically see around 30,000 new listings added to the site between March and May and have done so for the last 16 years, so this is a significant drop."
Williams said the drop in listings is likely a symptom of uncertainty in the market.
"Kiwis are known for delaying buying and selling decisions during times of uncertainty. And from interest rates to who will be in government next term - things are difficult to predict right now," she said.
Stock levels also began to level out with seven of 19 regions seeing a decrease in stock year-on-year during May
Stock levels were down by 9.1 percent in Auckland, 9 percent in Hawke's Bay and down a huge 36 percent in Gisborne, however, recent severe weather events would likely play a factor in stock levels for these three regions.
"While we aren't quite back to 2020 levels where stock was low across the board and the market highly competitive, this looks to be the beginning of a market shift," Williams said.
The report said the levelling of stock could eventually impact average asking prices as supply inches closer to demand.
