The number of houses on the market has reached a critically low level, forcing real estate agents to cut fees and compete harder for listings.
The latest figures from the Real Estate Institute show the number of houses on the market is 41 per cent lower than it was a year ago with Wellington and Hawkes Bay having less than eight weeks’ supply. Auckland has 10 weeks’.
REINZ spokesman Bryan Thomson said, “There’s no question the major feature of the real estate market is the tightness of listing stock right around the country”.
He is expecting property listings to rise in the spring, but demand in the major centres had been such that the last couple of years had not been “normal” at all.
In Wellington, where prices have jumped 15 per cent in the last year, a sudden upsurge in demand based on low interest rates and looser lending criteria has left buyers with fewer choices.
Agents reported fierce competition as they fought for houses to list.
Craig Smith, branch manager at LJ Hooker Titirangi said listings usually took a dive in winter.
“But at the moment I don’t think I’ve ever seen a winter market where there’s been so many buyers about and so little property to sell.”
“It affects other agents who have to explain why their competitors are cheaper or lower their commission.
“The more houses we have, the more chance people have of finding stuff and the more confident they are of coming on the market. This is not a healthy market.”
Another big factor holding people back was whether they could find a new home before selling the old one, Smith said.
“In the past, 50 per cent of the market might have sold first before they came to market because they knew how much they had and they were funded and they could buy.”
“Of course, now at 4 per cent, even a million dollars is going to cost somewhere $40,000 (£28,260) in interest and therefore the actual threat to get reasonable settlement terms is minimalised.
“We can’t see any end to the situation, because there’s no incentive for people to come to the market.”