Property sales are on an upward trend but sales volumes remain below normal heading into the spring selling season, according to CoreLogic.
Sales volumes, measured across both private and agent-led transactions rose 1.6% in August, compared to the same month last year, the data provider said.
But, data suggests sale volumes remain well below normal levels for this time of year, with the latest monthly total of 6320 about 15% below the 10-year average for August.
CoreLogic economists said the subdued levels of sales, combined with a reasonably steady flow of new listings coming onto the market each week, has been “contributing to a rise in the number of properties currently listed for sale”.
The data provider’s chief property economist Kelvin Davidson said that with “listings plentiful on the market, the relatively low levels of sales are more about buyer caution”.
“Clearly, lower mortgage rates will be boosting sentiment, but a reduction in job security will be pushing the other way in terms of buyers’ confidence,” he said in a media release.
“Of course, in this environment of low turnover, we’re also seeing property values drop, and that will tend to benefit some groups over others.
“Those who still feel confident about their jobs and can get the finance are in a position to take their time and secure a deal in their favour. This includes first home buyers at present, whereas mortgaged investors are still a little more circumspect.
“Buyers will be spoiled for choice, for example, in Wellington, Bay of Plenty, Auckland, and Otago, as total stock in each of these regions has risen by 20-25%.”
Davidson indicated that it may take time for the effects to fully materialise from lower mortgage rates after the Reserve Bank’s cutting of the official cash rate (OCR).
“As mortgage rates drop, the pool of willing and able buyers will start to grow again, and slowly erode that high level of listings, resulting in more competition and some upwards price pressure,” he said.
“But this might not happen overnight, however, given that interest rates are still relatively high, and existing mortgage borrowers on pre-agreed fixed rates won’t see the benefits of any cuts straightaway either.
The property economist said another OCR cut seems “all-but-certain next month helping mortgage rates to fall further too”.
“Although property values may not fall much further, a fresh boom seems unlikely when affordability remains stretched, listings abundant, and the labour market weakening.”
