Several factors drive real estate markets, however, the two basic fundamentals of supply (the number of total properties for sale) and demand (the number of buyers active in the market place) play a significant role in establishing market conditions that favour buyers or sellers. Generally conditions are favourable for sellers when supply is low and demand is high. There are lots of factors which contribute to the demand/supply and we’ve spoken about what brought about 2021’s extreme example of this in previous articles.
Conversely, when supply is high and demand is low, conditions are favourable for buyers by offering more selection and breathing room, allowing buyers more time to do their due diligence and make an educated decision on their future property. We are starting to see the market lean in this direction at the moment. Prices have levelled out and in some cases have come back
a bit from their peaks, the time on the market pushes out a bit and we can see a disconnect between where vendor’s expectations are (perhaps holding on to last year’s market) and where buyers see value (sometimes trying to build future downward market fluctuations into their offers).
Throughout May we saw 2139 ‘new listings’ come onto the market, up year on year by 16.63 percent. This was met by 1436 sales for May, a decrease of 28.91 percent. With a total of 4831 listings on the market in May for buyers to choose from, this is up a significant 60.45 percent year on year. In short, there is considerably more supply than this time last year.
The initial buyer metric we consider is the number of buyers viewing properties online. Throughout May we saw 4.376 million views across our Ray White websites, resulting in over 44499 enquiries which is still
Ray White New Zealand saw 683 properties scheduled to go to auction in May (down 19.26 percent when compared to the same period last year) leading to an all-sold clearance rate of 45 percent with, on average, two registered bidders and 1.5 active bidders. We are seeing quality homes in good locations with multiple bidding registrations and active bidders.
The final consideration we look at when measuring
the volume of demand in the market, and arguably the most significant, is the number of people obtaining pre-approval for finance. Pre-approvals are a key indicator of buyer confidence, knowing they have the financial capacity to buy the property. Our partners at Loan Market are still seeing increased numbers of pre-approvals across the country with 10 percent more than this time last year. This is despite the major changes to the Credit Contracts & Consumer Finance Act (CCCFA) which came into force on 1 December 2021 and rising interest rates. That does suggest we may in fact be heading for a period of increased activity again as pre-approvals get spent.
Locally we think the market is pretty “normal”. Special properties and properties offering fair value to buyers are selling with good demand. Anything which is overpriced will sit as buyers now have more options to spend their money on. We expect this to be the trend for 2022 with perhaps a wee burst of activity as we lead into spring.