2 September 2009

Latest data showing a decrease in new property listings suggests that scarcity of new properties entering the market in New Zealand’s main centres will put pressure on property prices.

According to the latest monthly issue of the NZ Property Report, the level of available inventory nationally — the number of weeks it would take to sell the country’s entire available stock based on average sale times — was down 34 percent on a year ago in August.

The monthly NZ Property Report summarises changes in the property market based on new listings and movements in asking prices (as opposed to actual sales prices). The nature of these statistics provides a forward-looking perspective of where the property market is heading.

The Report for August reflects a stable position in New Zealand’s property market with little movement in asking prices, level of inventory and level of new listings.   However, new listings decreased slightly when usually an increase is seen just before the ‘traditional spring upturn’.  There is concern that new listings will not be sufficient to meet the anticipated increase in demand.

The NZ Property Report states that “Spring is one of the most active periods of the year and with constraint of new listings; the market may not be able to meet this demand without consequential impact on prices.”

This news supports findings in the recent report from Infometrics, which suggests that New Zealand house prices will rise.  The report forecasted price increases of up to 24% in New Zealand’s main centres due to a shortage of new housing and increasing demand from buyers driven by low interest rates and an increase in net migration.

However, with asking prices remaining steady throughout August, prices are not yet reflecting this anticipated pressure on property prices.  If potential sellers continue to hold off listing properties, the shortage of available stock could push prices up over the coming months.