The supply and demand scale in the housing market is "tipping", the Real Estate Institute of New Zealand (REINZ) says.
Jen Baird, chief executive of REINZ, said although house prices continue to increase - albeit at a more moderate pace - sales activity is down and there are more properties on the market.
"The increase in available properties and the subdued demand is having a depressive effect on sales activity," she said.
"Market sentiment has shifted and with pressure to buy easing, we are seeing less competition, less urgency and fewer sales."
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She said all of this may in turn further ease price growth in the coming months.
Baird's comments are contained in REINZ's monthly property report for March 2022.
REINZ said house prices in February had seen a "moderate positive change of 0.6%".
Although the national median house price had increased 13.5% annually to $885,000 - with Canterbury, Taranaki, Southland, Otago, Gisborne and Bay of Plenty reaching record medians - Baird said prices were holding despite the change in market dynamics.
REINZ said sales were down year-on-year, decreasing 32.8% nationally in February 2022 - 8324 in February 2021 to 5597.
The sales count for New Zealand, excluding Auckland, had decreased 28.8% annually from 5412 to 3856. REINZ said this was the lowest sales count in a February month since 2011.
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In Auckland, the lowest sales count since 2019 was recorded - 40.2% from 2912 in February 2021 to 1741.
There was also an increase in median days to sell - up by 11 days to 42. The number of houses sold at auction had seen a "minor dip".
This was all despite more houses being on the market - a 47.0% increase from 15,829 in February 2021 to 23,270.
Baird reflected it would be interesting to see what March 2022 brings, as it is generally more stronger and busier than February.
KiwiBank lowers house price outlook
KiwiBank said on Monday it had lowered its house price outlook.
"We now see house prices declining 3% in Q4 this year, and a cumulative 5% decline by the start of 2023," it said.
Off the back of REINZ's data, KiwiBank felt the housing market has continued to cool and that the data paints a picture of a market in decline.
Prices in February increased 0.6%, according to REINZ. (Source: 1News)
It said tightening credit conditions remain the main inhibitor of demand. It said "tweaking Credit Contracts and Consumer Finance Act changes (CCCFA) won't rescue the market from future price falls".
Housing market continues to soften - Westpac
Westpac said REINZ's report showed the housing market had continued to soften in February. The bank feels a fall in house prices will be "a controlled descent, not a sharp lurch lower".
Westpac explained there had been three policy-related drags on the market in recent months, the chief one being higher interest rates.
Its forecast is for house prices to fall by a combined 10% over the next two years.
ANZ downgrades house price forecast
ANZ reflected REINZ's data was very close to its expectation.
It said there had been three consecutive months of price declines and that it now expected house prices to fall 10% over 2022.
The bank previously expected the contraction in house prices to be 7%.
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