Be careful of media hype

But this measure can get heavily thrown around by changes in the mix of properties sold from one month to another. In this case the February tally of sales included a lot of low-priced dwellings compared with November.

Instead, if we use the REINZ House Price Index which was developed with the Reserve Bank and adjusts for changing in sales mixes, we see that average property valuations in February were just over 5% down from November which was over 3% higher than any other month. In other words, hardly anyone has a house worth less now than in September or so last year in Auckland.

My desire in making this point is not just to give a warning to watch out for the price measure you may be using or reading about. It is to highlight that the media tend to take whatever the prevailing mood is on an issue and seek out sensationalist data and words to highlight the mood. That leads to a lot more clicks than saying nothing much is changing.

This is courtesy of the extra weakness in the residential real estate market caused by the credit crunch underway since the September quarter of last year.

Many people have been unable to get the finance they wanted, and many have seen their bank withdraw what they thought were firm offers of finance availability. The credit crunch alongside rising interest rates and now a rising cost of living has caused buyers to pull back from the housing market. But at the same time more sellers are stepping forward.

Some are acting in a hurry because they expect further price declines. But many more are looking to sell because they have grown confident that when they sell, they will then be able to find something suitable to buy. These existing owner-occupiers are not usually much affected by whether prices are trending up or down. For them what matters is supply and the supply of houses – both new and existing on the market – is rising rapidly.

This is not so much happening because of an unusually big wave of sellers, but more because sales volumes have pulled back and the stock of properties on the market has naturally built up a bit

For buyers this is good news. FOMO (fear of missing out) has all but disappeared, and worries about a lack of listings now rank well down on the list of things which buyers have concerns about. Of far greater importance now are concerns about getting finance, followed by worries about rising interest rates, and then worries that prices will fall soon after buying.