House buyers are sitting on their hands, new data suggests, and that could be an indicator of more price weakness to come.
House prices have been falling around the country in recent months. Corelogic reported the biggest quarterly house fall in 12 years in May.
Auckland real estate agency Barfoot & Thompson said its median sales price of $1.125 million in May was down 1.4% on the month previous and 2% down on the previous three-month average.
But turnover was down significantly, with 34.7% fewer homes sold in May than in May 2021.
* Auckland’s median house price fell 3.3% in April alone
* Auckland house sales and prices fall as heat comes out of market
* ‘Abnormally high’ number of expensive sales drive Auckland prices up
That is backed up statistics from credit bureau Centrix, which said applications for new mortgages were down 27% year-on-year in May and the value of mortgage lending was down 38% in April.
Peter Thompson, managing director of Barfoot & Thompson, said vendors were accepting that if they wanted to sell they must “reappraise” their price expectations.
But he said buyers were realising prices were not “falling off a cliff edge”.
Reserve Bank data shows there was $5.66 billion of new mortgage lending in April, compared to $8.49b last year.
ASB economist Mike Jones said the amount of sales activity occurring was the number one indicator of the direction of the market at present.
“In the boom, turnover was miles ahead of supply and that contributed to a tight market and pressure on prices and now we are seeing the flipside of that, buyers aren’t turning up to open homes and auctions. At the same time we have more new listings so the market isn’t clearing as rapidly, the pressuring is leaking out and sellers who want to make a transaction are having to accept lower prices.”
He said credit was harder for buyers to come by. Mortgage rates were the other indicator of how the market might perform.
Jones said it was likely to remain a buyer’s market for the next six to 12 months.
Mortgage adviser Jeremy Andrews said he was seeing similar levels of inquiry as earlier this year, but with interest rates and living costs increasing, not as many were in the position to buy as they would like.
“We’re having to advise more clients on managing their spending budgets, boosting and showing consistent savings, or paying down their shortest-term debts.”