NZ Property Market Braced For Full Impact Of Coronavirus

The World Health Organization’s declaration of a coronavirus pandemic has seen the economic crisis associated with COVID-19 ramp up to a whole new level, with a global recession seen as a near certainty.  

The surprise announcement of the Reserve Bank to cut the official cash rate to 0.25% for a year, along with the government’s $12.2 billion package of support is designed to help bolster the economy. Representing 4% of GDP, this is a substantial investment. 

The package is a mix of wage subsidies plus extra money for low-income families and those on social welfare, as well as changes to business tax. Finance Minister, Grant Robertson, is quoted as saying that the package will help to save some jobs, but it will not be able to save all jobs. 

Although the main banks all quickly followed suit in reducing their mortgages rates, the picture for the property market is not as rosy as it was even a few weeks ago. 

It’s hard to predict what’s going to happen in such a fast-moving and unprecedented global crisis. However, falling house prices, increased unemployment and increased debt defaults are all potential side-effects. 

Although we have a low incidence of the virus compared to many other countries, the changes to our way of life are already substantial. 

The detailed property report that follows is unlikely to look the same next month as the full impact starts to be felt in the property market.  


A record number of properties were sold in February across the country. According to data from  REINZ, sales increased nationally by 9.2% to the highest number of properties sold in February for four years. 

Auckland was a standout with volumes last month increasing 41% on the total for February 2019. This performance sets a five-year record. 

Selling more

Regions outside Auckland that showed significant year on year growth include the following: 

  • Gisborne: + 35.7% - its strongest performance in 15 years
  • Tasman: + 17.5%
  • Hawke’s Bay: +11.9%
  • Bay of Plenty: +11.7%

Selling less

Regions that have not performed well compared to this time last year include the following:

  • Nelson: -24.2% - the lowest for the month of February in six years
  • Taranaki: -20.7%
  • Southland: -17.9%
  • West Coast: -13%

The poor performance in these areas is likely due in part to the low number of new listings which is a nationwide trend.  

Stock shortages

The housing stock shortage has been confirmed by data from The data showed 22.3% fewer homes were available for sale last month compared with February 2019. 

In Auckland alone, there were 22.5% fewer homes available for sale compared to the same period last year. In other regions, the situation was even worse. Marlborough saw a new all-time low with 35.9% fewer homes for sale this February compared to 2019. It’s a similar story in Taranaki and Wairarapa with total stock down 42.6% and 36.3% respectively. 

Although the overall trend was downwards, some regions saw an increase. Gisborne and Hawke’s Bay are notable exceptions to the national situation with increases in new listings of 22.9% and 15.2% respectively. 


REINZ’s median house prices jumped 14.3% in February to a new record of $640,000. This was the largest percentage increase in 53 months. 

Record prices were recorded in 7 regions. 

  • Northland with an 11.9% increase to $560,000 
  • Gisborne with a 15.4% increase to $450,000 
  • Manawatu/Wanganui with a 22.8% increase to $425,000 
  • Wellington with a 10.8% increase to $716,000 
  • Tasman with a 13.7% increase to $665,000 
  • Marlborough with a 21.2% increase to $531,250 
  • Canterbury with a 4.2% increase to $474,000 

The Trade Me Property Price Index along with the REINZ House Price Index (HPI) both showed record highs for every region in February. In a situation that’s unlikely to continue with the economic fallout caused by COVID-19, the REINZ index increased by 8.7% on February 2019 for a new record high. 

These trends were echoed in CoreLogic’s QV February 2020 HPI results. Nationally the average home is now worth $722,475 which is up 5.3% from February 2019. 

According to the data, property values have continued to rise across each of the main centres. However, Dunedin leads the way with an annual increase in February of 18.1%.  

The Trade Me Property Price Index showed a record average asking price for small houses (1-2 bedrooms) of $485,600. In addition, the data demonstrates that apartments are becoming more popular among buyers with the average asking price increasing 6.5% to $672,700. 

Data from Statistics NZ confirms the increasing popularity of apartments and multi-unit dwellings. When it comes to nationwide building consents, apartment consents were up 24.1% over the same period and retirement village units showed 15.1% growth. By comparison, the number of standalone houses consented grew by only 4.6%.

Days to sell 

The median number of days to sell in February has continued its downward trend. Nationally, according to REINZ, the figure was 35 days compared to 47 in February 2019. This is the lowest it’s been for 13 years.

Manawatu/Wanganui was the best performing region at 24 days. The lowest-performing region, by contrast, was Northland where the average number of days to sell was 60, down 5 days from February 2019. 

Auction rooms were again busy in February with 16.8% of all sales nationwide going under the hammer. This is the highest percentage since November 2017. 


Rents continued to hit record highs in February. 

  • Stock measure of rental property prices increased 3.4 percent.
  • Flow measure of rental property prices increased 2.3 percent.

It had seemed likely that weekly rents would continue to increase with regulation putting an additional squeeze on the market in the wake of cautious landlords. However COVID-19’s impact muddies the waters. For example, in areas which had a lot of AirBnB for tourism, there will be downward pressure on rents as these properties come back into the long term rental pool. 

Where to next? 

The economic fallout from the coronavirus pandemic is likely to hit the property market hard over the coming months. Analysts are now expecting house prices to fall. Some are even predicting that it could be, as much as 5-10%. 

Despite the record low mortgage interest rates, there are fears that COVID-19 could lead to a credit crunch as unemployment inevitably increases. 

The government’s unprecedented $12.1 billion package of support is designed to deal with the worst of the economic effects, however it won’t be able to save all jobs and is unlikely to stave off recession.  

Job losses as well as reduced consumer spending and subdued confidence from home owners will be felt in the property market nationwide. The situation for those areas that are dependent on the worst-affected industries will be even more challenging. 

In a global recession that’s predicted to be even worse than the GFC, the bad news is that the crisis could continue for some time yet. 

I’ll keep you updated and informed on what is a rapidly changing situation.