The September Trade Me Property Price Index showed the number of homes for sale in New Zealand soared 67% in September, which saw “more properties for sale than in any other month of September on record”.
At the same time, buyer demand remained weak, with national ad views falling 1% in September.
Earlier this week, Statistics New Zealand showed the country had seen a net loss of overseas (NOM) migration of 11,500 in the year to June 2022, driving population growth to its peak. lowest level since World War II.
This sharp decline in population growth due to negative immigration has seen the supply of new housing in New Zealand exceed population demand by 60,000 homes over the past two years, according to interest.co.nz:
Interest.co.nz estimates that a population increase of 12,700 in the 12 months to June this year would have created demand for an additional 4,885 new homes, based on average household occupancy during the 2018 census. But it is likely that around 37,614 new homes were completed during this period, giving an excess of supply over demand of 32,729 homes.
This comes on top of an estimated surplus of 26,650 homes in the 12 months to June last year, giving a total surplus of 59,379 homes over the past two years.
This is a substantial turnaround from previous years, when housing demand significantly exceeded supply, creating a growing housing shortage.
Interest.co.nz previously estimated that high levels of immigration in the year to June 2020 meant demand for new homes exceeded supply by almost 10,000 homes that year.
So basically buyer demand has collapsed due to rising mortgage rates at the same time the number of homes for sale has ballooned. At the same time, more homes are being built than needed for New Zealand’s growing population.
While the Reserve Bank’s aggressive interest rate hikes are the main reason New Zealand house prices have fallen 12.6% from their peak in November 2021, the growing imbalance of supply and demand adds new headwinds to the real estate market.