Economist says decrease in sales highlights sluggish housing market
The Reserve Bank’s record-low official cash rate (OCR) last month was meant to prompt a pick-up in the housing market. However, new report has revealed that sales still have slumped again.
According to the Real Estate Institute of New Zealand (REINZ)’s latest report, the number of sales nationwide fell by 6.1% year-on-year to 5,959 last month – considered to be the lowest level in seven months and the lowest for August since 2014.
The regions with the greatest annual decrease in sales were Southland (down by 33.2%), Hawke’s Bay (18.4%), and Taranaki (16.6%).
Bindi Norwell, chief executive at REINZ, said the situation was surprising given the strength of July’s figures. However, she pointed out that the extremely wet August in most parts of the country and a shortage of listings may have prompted the decrease.
“We’re hearing that people are waiting to purchase before they put their own property on the market, which is slowing the whole market down,” Norwell said.
“Hopefully, as confidence starts to improve over the coming months, we’ll start to see this flow through to new listings which leads to more choice for buyers.”
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Jeremy Couchman, senior economist at Kiwibank, commented that REINZ’s latest report just proves that the country’s housing market is sluggish and not quite out of the woods yet.
“Housing affordability constraints are likely to be coming into play. And for investors wanting a slice of the regions rental yields may not look as attractive,” Crouchman said.
He predicted that prices will rise a little this year while aggregated house price gains will pick up towards 5% to 6% into 2021, which could be driven by modest rises in Auckland after years of flat or falling prices.
“Regions that have experienced significant house price appreciation in recent years are likely to see future gains ease as the current rally in prices runs out of steam. So it’s a mixed picture, as it was this time last year,” Crouchman concluded.
