It is supposed to be the busiest time of the year. Yet Realestate.co.nz is awash with properties for sale.
The website had 29,083 homes listed for sale across New Zealand at the end of February, up 25% compared to a year earlier.
It was also the most homes listed for sale on the website in any month of the year since 2015.
The ballooning in unsold properties came despite the number new listings falling to a record low in February.
That is, Realestate.co.nz received only 8143 new listings nationwide in February, which was down 29% compared to February last year, and the lowest number of new listings received in any February on record.
Competitor website Trade Me likewise reported a 29% year-on-year increase in the number of homes for sale in February, whereas homebuyer demand nationwide was down 5% annually.
Meanwhile, New Zealand’s banks approved just 8,680 new mortgages in January, which was the lowest number in any month of the year on record and less than one-third the 2021 peak:
The driver of the collapse in home buyer demand is obvious: the Reserve Bank’s ultra-aggressive monetary tightening, which has lifted the official cash rate from 0.25% in September 2021 to 4.75% currently:
In turn, New Zealand mortgage rates have doubled (see below chart), which has already driven national house prices down by 16%.
The Reserve Bank’s latest Monetary Policy Statement explicitly said that it intended to hike the cash rate further and drive the economy into recession in order to kill inflation.
In doing so, the Reserve Bank forecast a 2% increase in unemployment as well as a 23% peak-to-trough decline in national house prices.
With a prognosis like that, no wonder Kiwi home buyers have fled the market housing market.
