It is becoming increasingly clear that the 5.25% worth of official cash rate (OCR) hikes by the Reserve Bank of New Zealand are crashing the housing market.
Last week, Statistics New Zealand released data on residential building permits, which registered a heavy 8% decline in January. Detached house approvals also collapsed to their lowest level in more than a decade:
The collapse in building permits was broad-based, with declines recorded across all major markets:
The sharp decline in residential building permits also points to a heavy decline residential building activity as share of GDP:
The Reserve Bank’s severe monetary tightening is also impacting the for-sale market, with new data from Auckland’s largest real estate agency, Barefoot & Thompson, showing “the largest buyers’ market since 2011”:
“Barfoot’s received 2255 new listings in February, the the highest number of new listings in February since 2017 and the highest number in any month of the year since November 2021, which was the peak of the last housing boom”, Interest.co.nz reported.
“That pushed up the total number of residential properties for sale on Barfoot’s books to 5382 at the end of February”.
“Barfoots have not had that many properties to sell since April 2011, which means current stock levels are at a near 13 year high”.
The median selling price of $970,000 in February was also down 6.7% compared to December, whereas the average selling price of $1,116,150 in February was down 5.5% compared to December last year.
“There is a log jam of homes for sale which is creating the largest buyers’ market we have seen since 2011”, Barfoot & Thompson Managing Director Peter Thompson said.
“This build up of homes started in August and in the last six months has reached the point where buyers have rarely had such a depth of choice”, he said.
Separate data from Realestate.co.nz also recorded 11,788 new residential listings in February 2024, up 45% on February last year and the highest number of new listings the website has received in the month of February since 2017.
This increased the overall number of residential properties listed for sale on the website to 31,424 at the end of February 2024, up 8.1% from February of last year.
The amount of stock on the market at the end of February was the highest it has been in any month of the year since June 2015.
It was also the first time since November 2015 that more than 30,000 homes have been listed for sale across New Zealand.
The Reserve Bank’s aggressive rate hikes have already crashed residential construction. The flood of for-sale listings risks delivering a double-dip house price correction as well.
