Interest rates drop, unsold houses flood the market

Although the major banks are dropping their home loan interest rates, there are few buyers on the ground for the log jam of homes for sale in Auckland.

Wednesday, March 6th 2024, 10:09AM

The BNZ is the latest bank to drop its rates and it now has the lowest fixed term carded rates of the main banks.

It started the latest round of interest rate cuts about two weeks ago and the one year rate among all banks ranges between 6.69% and 7.39%, a difference of 70 basis points.

This comes as Barfoot & Thompson, Auckland’s biggest real estate agency, has 5,382 listings on its books, flooding the market.

“There are more homes for sale in the city than at any time in the past decade,” Peter Thompson, Barfoot & Thompson managing director says.

Not since 2013 has the city had so many residential properties available for sale, rising from 1,221 listings in January to the new 11-year high.

Barfoot and Thompson had 2,255 new listings last month, the highest number in a February month since 2017 and the highest number in any month of the year since November 2021, which was the peak of the housing boom.

However, buyers are not thick on the ground, but this is not depressing property prices.

Thompson says there are more homes for sale than active buyers. The agency sold just 633 homes last month. However, that is up 54% on February last year when the market was in the doldrums.

The agency's average selling price was $1,116,150 last month, up 3% compared to January, but down 5.5% compared to December last year.

The median selling price was $970,000 last month, up 0.4% compared to January, but down 6.7% compared to December.

"There is a log jam of homes for sale which is creating the largest buyers' market we have seen since 2011," Thompson says.

"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.”

Thompson says this is due to a combination of a high number of new homes reaching the market, owner-occupiers moving forward with relocation plans as the market re-emerges from the downward cycle, and the normal hesitancy of buyers trying to get their timing right in terms of price and mortgage rate.

Tags: housing market