Property market bounces back after lockdown.
The NZ property market has surpassed the expectations of even the most optimistic commentators. The latest data confirms the property market has continued to bounce back after lockdown.
Across the country, house prices are up, new listings have increased and the number of homes sold has also improved. The data has led realestate.co.nz to declare that it’s now a buyer’s market in Auckland, Nelson & Bays, Canterbury and Central Otago/Lakes.
No doubt falling interest rates, the removal of loan-to-value ratios and demand from the large number of returning Kiwis have had an impact. So too has the government's wage subsidy and mortgage holiday schemes.
However, the global economic outlook is decidedly gloomy. The resurgence in Covid-19 cases in Australia, Europe and the US is casting a dark shadow over the world economy. Although so far, NZ’s economy is in reasonable shape, we are bound to be affected by any large-scale global downturn.
Furthermore, the election is now just a few weeks away. National elections tend to have a dampening effect on property markets as owners and buyers adopt a wait and see approach.
The wage subsidy and mortgage holiday schemes are due to end shortly. Both have had a cushioning effect on the post-lockdown property market. However, Finance Minister Grant Robertson has hinted that the programmes may be extended, perhaps to the end of the year – so watch this space.
Here's a run-through of some of the critical property market data.
- Property prices
According to the Real Estate Institute of New Zealand (REINZ), house prices across the country increased by 9.2% compared to June 2019. The median house price in June was $639,000, which is up on May's figure of $620,000.
The top-performing areas of Auckland, Gisborne, Otago and Southland all saw strong prices in June.
- Property listings
New property listings have also increased nationwide, up by 19.7% on the same time last year says realestate.co.nz. Southland, Auckland and the West Coast saw the biggest increases in new listings when compared to this time last year.
Although most regions saw an improvement, Gisborne, Wairarapa and Marlborough all had small decreases.
- Number of properties sold
And according to REINZ, the number of properties sold nationally increased by 7.1%. Traditionally winter is a quiet time for sales, but this is the best result for a June month in over four years.
The top-performing regions were as follows:
- West Coast (up 43.2%)
- Southland (up 27.7%)
- Taranaki (up 19.7%)
- Days to sell
REINZ is reporting a return to the pre-Covid number of days to sell a property. Nationally, the figure increased from 45 in June compared to 41 at the same time in 2019. However, this was down from the 58 days experienced in May.
- Where to next?
We may still be seeing the effects of a post-lockdown sugar rush in the property market. However, as the global economy worsens and the local impacts of the pandemic become clearer, things are bound to change.
It also remains to be seen whether the large number of Kiwis returning home continues. If it does, then there will be a significant impact on local property and job markets.
Business commentators are still predicting more job losses as government wage subsidies come to an end. And if unemployment rises, then banks are likely to tighten their lending criteria even further.
As we head towards the September election, we may see the market slowing down in the face of the political and economic uncertainty.
If you are thinking about buying or selling your home then get in touch, I’m only a phone call away.