Auckland house buyer frustration is not a supply problem – it’s all about growing demand
The Auckland property market is not suffering from a low level of listings. The property market in Auckland is experiencing a lack of selection of property to buy caused by high demand which is depleting inventory.
It may seem a pedantic point but I think it is important. The analogy would be for a warehouse where the shelves seem only half full. The delivery from suppliers has not changed much over the past year but with more people coming into the warehouse and buying – even buying the dented and dusty products there is less stock on the shelves.
Looking at the data from REINZ and Realestate.co.nz published monthly highlights exactly what is going on and thereby avoids alarmist or self-serving statements like “number of properties being listed for sale was still way down" as stated by Helen O’Sullivan of REINZ, and "It's quite a battle to find the house that you actually want to buy, because of the low number of listings," from ASB chief economist Nick Tuffley.
Real estate agents want to talk about low levels of new listings, as their business is to list properties. It is admittedly hard to quantify demand in the property market, as sales volume is a resultant outcome of satisfied demand, unsatisfied demand that is sure to be high in the Auckland market at this time is harder to quantify.
The facts as shown by the data of new listings from Realestate.co.nz shows that for January the number of new listings coming onto the market was no lower than the past 4 years of January’s – January is a low month.
Examining the seasonally adjusted numbers from Realestate.co.nz as the chart below shows provides a useful perspective – January represented a very average month at the seasonally adjusted level of 3,594 new listings – there were 23 months in the past 4 years with less listings and 25 months with more listings.
The core number to examine is inventory – the number of properties on the market. At the end of January this year there were 8,622, a year ago there were 11,162, in January 2011 there were 13,349 and in January 2010 a total of 13,396.
Property sales are up and property is selling faster. Very importantly there is less “redundant stock” on the market – property that at one time in the past 4 years might have been hard to sell is now selling; thereby reducing the available selection of property on the market.
This is best shown in the chart below which shows actual sales, listings and inventory of houses on the market over the past 4 years – that red line showing the extent of the decline inventory is the most telling. As the sales over the past 3 years (as shown by the yellow average sales line) goes up so inventory falls.