Private property issue #121 - July new listings

The bright-line test changed 6 weeks ago. So, some investors can now sell their properties tax-free.

So, are more investors selling? I just got new data. This gives us our first real look.

Are more investors selling?

Way more properties are coming to market.

31% more properties were listed in July 2024 compared to the year before (8,080 in July 2024 vs 6,156 in July 2023).

When we look at the main regions:

• Auckland listings are up 25%

• Canterbury is up 36%

• Wellington is up 55%

But this isn’t just down to the changing bright line test.

The big jump in listings actually happened in February, a couple of months before the bright-line rules changed.

Since then, we haven’t seen much more uptick. It’s not like a switch turned on, and everything changed.

So why did everyone start selling in February?

Perhaps it’s because the economy is not going well, and people need to sell. That would explain why Wellington listings are up over 50% year on year.

If you lost your job in the wake of public sector job cuts, perhaps you need to sell.

Are investors just waiting?

It’s unreasonable to think that as soon as the bright line changed, everyone would rush to the front lawn with “For Sale” signs.

If I was selling, I’d wait for Spring and Summer.

That’s when house prices tend to rise. That way, I’d have a better chance of selling and getting a good price.

So, are investors just waiting in the wings?

There is a tiny uptick in the number of investors wanting to sell. A net 16% of real estate agents say more investors are selling, compared to 14% in June. But that’s more of a blip. It’s not a huge change.

Though, agents do say that more people are asking for property appraisals. So, I called CoreLogic. They say that agents are creating more appraisals in their system (+10%).

This could mean more listings could come soon.

I thought there’d be more listings

Honestly, I thought there’d be a big surge in listings as soon as the bright-line test changed.

I often meet investors who say they’ve wanted to sell. But they’ve been waiting for the bright line test to change.

But it’s not a great time to sell. There is a lot of competition, and the market will still be depressed throughout 2024.

Perhaps investors holding on by their fingernails will decide to wait a bit longer.

After all, interest rates have fallen. Most investors hope they’ll fall further.

Perhaps they’ll wait for lower rates or until it’s a better time to sell.

So, I’m not convinced we’re seeing the full effect of the bright-line test changes just yet. We’ll need to wait for more data.