September property sales muted, market hasn’t turned yet

Tuesday, 15 October 2024

There were more potential buyers than usually seen in spring at open homes last month, but the market remains subdued, the Real Estate Institute says.

The national median sale price declined by 2.3% annually to $781,000 in September, but it was up 2.1% from $765,000 in August, according to the institute’s latest figures.

Eight of the 16 regions recorded annual price increases, but prices were down in the country’s biggest market, Auckland, where the regional median fell 5.4% to $970,000.

Of the other main centres, prices were up 1.6% in Wellington to a median of $792,500, and up 0.3% to $682,000 in Christchurch.

Marlborough had the steepest fall in prices, with its median down 8.1% to $680,000, while Gisborne had the biggest increase, up 10.1% to $605,500.

The institute’s house price index, which smooths out variations that come from sales figures, was up 1.0% from August, but down 0.4% on the same time last year. It was 15.8% below the 2021 market peak.

Sales nationwide dropped 1.1% annually to 5816 in September from 5439 at the same time last year, and they were down 3.3% on the previous month.

Real Estate Institute chief executive Jen Baird said while the market remained subdued, there had been a noticeable rise in positivity and confidence things would continue to improve.

Despite lingering challenges such as the cost of living, many believed that the downward trend of interest rates would lead to a gradual recovery heading into 2025, she said.

“After the Reserve Bank reduced the OCR rate by 50 basis points to 4.75%, the market is expected to see more activity from those who are ready to buy, reinforcing the optimism in the market.”

Local agents around the country had noted an increase in buyers attending open homes, more so than the usual spring lift seen each year, she said.

“With seven out of 16 regions now seeing an uplift in sales, buyer engagement is improving, with listings receiving more enquiries.

“These trends could lead to a more robust market in the coming months, particularly if expected improvements in market activity and reductions in interest rates eventuate.”

But the data showed the market has not turned yet, with the median number of days it takes to sell a home up nine days to 49 days from 40 at the same time last year.

At the same time, the total amount of properties on the market nationwide increased to 30,028, up by 27.4% annually and by 1.5% from August.

Baird said the continuous rise in inventory and listings gave buyers ample choice and time to find suitable properties.

CoreLogic’s latest figures, which were out earlier this month, also showed a soft market in September with prices falling for the seventh month in a row.

That left the national median at $805,426, down by 1.2% annually and by 0.5% from August.

CoreLogic’s chief property economist Kelvin Davidson said an OCR cut had driven short-term lift in confidence and a more active market might stop prices falling in the near future.

But there were plenty of reasons why they were unlikely to surge upwards, he said.

“Housing affordability remains stretched, and elevated listings are putting finance-approved buyers in a strong position when it comes to price negotiations.”

The most important restraint was the labour market, as job losses limited house sales and prices, and the knock-on effect on sentiment and flatter wages also subdued the housing market, he said.

“Looking ahead, it wouldn’t be a surprise to see limited growth in house prices in 2025, as mortgage rates drop.

“But keep in mind that lower rates will simply bring forward the timing for the debt-to-income restrictions to start biting; another reason to be cautious about the speed and duration of the next housing cycle.”