The big home supply and demand gap

The number of people definitely looking to buy a residential property continues to outstrip the number definitely intending to sell.

Research conducted for Property Press since 2010 shows the number of adults nationwide who say they  are “definitely” going to buy in the next 12 months has been outstripping the number who will “definitely” sell since September 2012.

The latest study by Horizon Research*, continues to highlight the national undersupply issue.

Polling of 2,148 adults New Zealand wide in September this year found a marked rise in intention to buy: 9.2 per cent of respondents said they were definitely looking to buy in the next twelve months compared to 5.9 per cent of respondents in November 2014. The September 2015 definite intention to buy percentage is the highest recorded since measurement began in October 2010. Horizon says this could partly be due to the start-of-spring timing of the poll, but the underlying poor supply trend remains.

The number of people definitely intending to sell a property is continuing to decline steadily and now sits at 3.4 per cent, the lowest figure since measurement started.

An estimated 91,100 more dwellings are needed in the market to meet demand from those definitely intending to buy – significantly up on the 29,900 reported in November 2014.

In Auckland supply has remained static for some time, with an estimated undersupply of 31,700 dwellings.  

Undersupply is by no means an issue limited to the Auckland market, however.

Wellington continues to show an undersupply, with a further lift in definite buying intention from 8.7% in November 2014 to 10.2% in September 2015 and a further curtailment of supply from 3.9% In November 2014 to 1.7% in September 2015.

There was a small oversupply reported in Christchurch in November 2014, but there is now an undersupply of around 3,400 dwellings.  Although definite buying intention only increased slightly from 3.4% in November 2014 to 4.0% in September 2015, definite selling intention has fallen to 2%.

In the areas of Auckland covered by Property Press the ratio of supply to demand has fallen back from 46% in November 2014 to 29%, lower than the 31% reported in February 2014.  The Auckland areas covered by Property Press have a gap of around 28,300 dwellings.  There is a 3,400 dwelling supply gap in the other areas of Auckland.

In the rest of the northern North Island (excluding Auckland), there is now an undersupply of around 9,800 dwellings.

In Wellington there is a potential undersupply of around 15,500 dwellings as a result of a lift in definite buying intention and a further curtailment of supply. In the areas covered by Property Press in the southern part of the North Island, excluding Wellington, there is now an undersupply of around 6,500 dwellings. 

In the South Island areas covered by Property Press there is an undersupply of 14,600 dwellings.  Interestingly, 77% of this undersupply comes from outside Christchurch.

*Source: Horizon Research Property Media Survey, September 2015. Sample 2,148 18+. Maximum margin of error +/- 2.2%