Property glut creating 'buyers' market'

File photo / Janna Dixon

New Zealand's housing market remains in negative territory with an escalation of new listings adding to a glut of homes already on the market.

More than 14,000 new listings were added to the New Zealand property market in March, bringing the number of unsold homes to 55,623.

Current estimates by realestate.co.nz are that it will take more than a year to clear the available stock based on current sales rates.

Realestate.co.nz chief executive Alistair Helm said vendors needed to have realistic expectations of what their property was worth in the current market.

"Sellers appear to be in denial as the asking price for new property listings in March rose slightly and is now only one per cent below the peak of the market back in October 2007."

Sellers needed to be flexible on the prices they were asking in what was clearly a "buyers' market", Helm said.

ASB economist Jane Turner said the listings data provided an early guide to the housing market sentiment in March.

"Although the number of listings remains low, the number of sales is likely to be even weaker," she said. "The rise in new listings remains muted, suggesting there is little sign yet of a rush to sell off investment properties in response to proposed tax changes."

Turner said the rise in total housing inventory pushed the balance in the housing market back towards a buyers' market, and as a result she expected prices to remain subdued.

The inventory level of unsold houses, as measured by the number of weeks of sales necessary to clear the market, had extended beyond the one year mark, to 53 weeks during March - 53 per cent up on December's figures.

The report also highlighted an urban-provincial divide, with the stock of unsold homes in provincial New Zealand rising to 70.1 weeks of inventory, against 39.8 per cent in the three major cities.

The number of new listings also rose in provincial New Zealand to 6719, against an 11 per cent decline in new listings across the major metropolitan areas, the report showed.

Seller's asking prices also continued to rise during March, and were edging closer to the market national peak of $429,033 recorded in October 2007.

See the full report here.