Property market update: Spring surge in sales despite lockdowns
Spring traditionally sees an uplift in the market as would-be sellers and buyers capitalise on the feel-good factor of warmer weather and longer days. The latest data from REINZ shows an increase in house sales and prices over recent months. All this as the country grapples with continued lockdowns and Covid restrictions.
Here’s our analysis of the latest trends in the property market.
According to REINZ, the number of sales nationwide in October decreased by 21.7% year-on-year. However, sales were up 30.3% on September.
The slight easing of restrictions in Auckland saw a massive uplift in sales activity, with 85.5% more sales in October than in September.
While sales decreased across all parts of the country, some regions fared worse than others. Sales in the West Coast were down 55.2%, which is the lowest October count in six years. Northland also saw a significant year-on-year decrease of 40%.
The average house price in New Zealand has increased to $895,000 in October 2021, up from $725,000 in October 2020.
Ten out of the country’s 16 regions reached record median prices in October. Big winners included Hawke’s Bay +37.7%, Taranaki +31.1% and Canterbury +31.0%. Both Auckland (+25.0%) and Wellington (+26.8%) saw strong performance.
Median days to sell
Across the country, it took longer to sell a property in October 2021 than the same time last year. Last month, the median number of days to sell nationwide increased to 34 days compared to 29 the previous year.
Auckland saw a significant year-on-year increase of 15 days, with the median number of days to sell coming in at 45.
Supply continues to be an issue nationwide, with the number of properties available for sale down 16.1% compared to 12 months ago.
The situation across the regions was more varied. Wellington saw a 35.5% uplift on last year, and Manawatu/Wanganui also saw an increase of 31.6%. However, the West Coast had a year-on-year decrease of 42.6%, and Nelson was down 39.4%.
Property market outlook
As spring turns to summer, we will likely see a continued surge in property sales and prices despite ongoing Covid restrictions. Record low interest rates, limited supply and the fear of missing out have been driving the property boom.
However, the long-term outlook is uncertain. Interest rates are likely to climb further over the next couple of years. Furthermore, new legislation requires banks to tighten up their lending, and several have introduced new debt-to-income ratios. At the same time, landowners will soon be able to build three homes of up to three storeys. Some commentators are predicting we could see average house prices start to fall in response to these changes.
A lot is going on in the property market these days. One thing for sure is Loan Market advisers will keep you updated on all the latest developments.