House sales up annually for first time in two years – Stuff

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Housing market activity has turned a corner, with the number of sales around the country up 7.5% annually last month, one economist says.
There were 5959 sales, including real estate agent and private transactions, nationwide in May, up from 5542 at the same time last year, CoreLogic’s latest Housing Chart Pack showed.
It represented the first annual increase in sales since May 2021.
While there was a 0.4% annual decline in May in the Real Estate Institute’s latest figures, the institute’s sales figures do not include private transactions.
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CoreLogic chief property economist Kelvin Davidson said while the sales increase was another sign the downturn might be nearing an end, it came off a very low base.
The total number of sales over the last year was between 58,000 and 59,000, and that was the lowest annual figure since 1983, he said.
“With the 20-year average annual sales total at around 96,500, sales are a long way off ‘normal’ volumes, and the market remains very quiet.”
But a turning point had to start somewhere, and while it was too early to call it a new trend, it now looked more certain that sales volumes had finally bottomed out, he said.
The figures also showed there were 6439 new listings over the four weeks ending June 6, down 28% from 8996 at the same time last year, and down 20% down on the previous five-year average.
Davidson said that with new listings remaining low against a backdrop of rising sales, the amount of homes for sale was starting to tighten up.
There were 33,798 available listings, which was 4.5% lower than this time last year, and stock was tightening in key regions such as Auckland, Bay of Plenty, and Wellington, he said.
“This might start to put pressure on house prices, and the question becomes when will we see prices start to pick up again.
“There is likely to be a lag between the improvement in market activity, and any changes to prices. There could be another couple of months of declines in price indexes to come.”
It looked like the market downturn was pretty much over, but that did not mean an upturn was on the way, and there were reasons for caution, he said.
“Housing affordability is still a problem, mortgage rates may have peaked, but they will be at this higher level for some time, and we could see the introduction of caps on debt to income ratios next year.”
“The market will remain quieter, but the peaking of mortgage rates and still-strong employment should underpin some growth in sales and mortgage activity later this year, with prices finding a floor.”
First home buyers might look at the commentary about the downturn coming to an end, and panic about prices taking off again, Davidson said.
“But they shouldn’t because any price growth is likely to be moderate, so they will not be looking at falling behind in getting a deposit together, and if mortgage rates are flat that gives some certainty.”
The share of purchases going to first home buyers remained strong at 25% nationwide, and at 28% in Auckland, CoreLogic’s figures showed.
In contrast, mortgaged investors’ market share of 20% nationwide remained low by historical standards, and well down from the record peak of 29% in the first quarter of 2021.
But cash investors market share was 16%, and that meant 36% of purchases were going to investors overall, Davidson said.
“It shows there are still investors out there buying, despite the tougher environment, and that will always be the case.
“There is high migration, and demand for rental properties, and that demand is not going to go away, so we do need investors to buy properties and rent them out.”
Last week, the Real Estate Institute’s latest figures also showed market activity had improved, with sales up 30% between April and May.
And in economist Tony Alexander’s latest survey of real estate agents, there was an increase in the number of agents who reported more people attending open homes and auctions.
© 2023 Stuff Limited

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