We have a somewhat interesting situation going on right now, where Auckland has well and truly become a buyers market, while Wellington remains the total opposite. One of the clearest ways to see this play out is by looking at inventory levels…
Imagine if, as of today, no more houses came on the market in Auckland. Not a single one.
Based on the current rate of monthly sales, it would still take 4 & 1/2 months (18 weeks) just to sell the properties that are already available for sale.
Over 4 months. That’s how long it would take just to clear the backlog.
That smells like a slowing market to me. Why? More houses on the market means more choice for buyers. What happens to you when you have more choice? For me, it makes me slow down and take my time while I consider my decision, knowing that other options are only a day or two away from becoming available.
This environment puts downward pressure on prices as motivated owners working to a timeline move their expectations downwards to meet the market, setting new benchmarks.
As this happens more and more, a new normal is created. While we haven’t seen massive price reductions in Auckland as yet, this could be a sign of things to come.
Compare this to Wellington, which currently has 8 weeks of inventory available.
In other words, if nothing else came on the market, it would only take 8 weeks to sell all the houses available for sale in Wellington. It is no surprise that we are still seeing strong price growth in the Capital City with all signs pointing to a strong, seller’s market.
Two different markets for two very different Cities…
Table 1: Total sales in March, each of the last 4 years.
Check out the drop off in Auckland…
Table 2: Inventory levels based on past monthly sales…
|Total sales (Last 12 months)||Monthly Avg||Listings on trademe||Current inventory (based on monthly avg.)|
|Auckland City||7014||585||2445||18 weeks|
|Wellington City||3231||269||499||8 weeks|