Property Market continues to thrive but impact of lockdown 2 still to hit
The latest property market data shows sales volumes and prices are up nationwide with some regions experiencing record-breaking increases.
According to Trade Me Property, the national average asking price reached $697,100 in July, a jump of 9% on this time last year. And the Real Estate Institute of New Zealand (REINZ) reported a 24.6% increase in the number of properties sold nationwide in July.
However, these results were before Covid-19 once again reared its ugly head in New Zealand.
The good news is that unlike the first lockdown, real estate activity can still take place at levels 3 and 2. However, any lockdown will have an impact, and we could see a fall in the volume of new listings.
The signs are encouraging that the latest outbreak will be contained quickly and it’s likely the property market will bounce back as it did after the first lockdown.
Here’s the latest data.
According to realestate.co.nz, buyers had plenty of new stock to choose from in July. New listings were up 20.7% on the same period last year.
Regionally, the big winners included the West Coast (+ 81.0%) and Coromandel (52.4%).
However, Gisborne saw a decrease in new listings (-26.5%), as did Wairarapa (-30.7%).
Nationwide REINZ reported the highest number of properties sold in a July month for five years. All regions except Gisborne and Marlborough saw increased annual sales volumes.
Data from realestate.co.nz recorded 13-year stock lows in 10 of the country's 19 regions. The worst-affected areas included the following:
- Taranaki: -48.4%
- Wairarapa: -46.2%
However, some regions performed well including:
- Hawke’s Bay: +17.8%
- Central Otago/Lakes: +17.8%
Median house prices increased across the country by 14.8% to $660,000, according to REINZ. Every region experienced an increase in median house prices; however, some achieved standout results as follows:
- Gisborne: +36.0%
- Taranaki: +23.9%
- Manawatu/Whanganui: +19.6%
Even tourist-dependent areas that were predicted to be hard hit have performed well. Queenstown-Lakes set a record median price of $1,100,000, while Rotorua’s median price increased year-on-year by 9.4%.
Days to sell
Nationally, REINZ reported the median number of days to sell a property decreased in July to 34 days from last year’s 41 days.
Most regions recorded a month-on-month decrease in days to sell. Taranaki was the top-performing region at 25 days, while the West Coast had the highest number of days to sell at 56.
The number of properties going under the hammer was up 8.6% on last July’s performance, accounting for 13.8% of all sales. This is the best result for a July month in four years, according to REINZ.
Despite the lockdown, MBIE reported average rents nationwide were 4.8% higher in the three months to June than in 2019.
However, there were significant regional variations. Property rents in Queenstown, for example, have fallen by 10% year-on-year. Other areas seeing a decrease included Masterton and Westland.
Where to next?
Both the wage subsidy scheme and mortgage deferral programme have been extended, which will have a cushioning effect on the market.
The Reserve Bank has indicated it's considering a negative official cash rate. And many commentators are predicting that interest rates will go below zero next year. This may boost short-term confidence but could also lead to tighter lending by the banks.
For the property market and the economy generally, much is riding on the length of this lockdown. Many will be hoping for a move to level 1 at the government’s next review on 6 September.
Get in touch for more information on any of the latest trends.