At the beginning of 2020, everyone was excited about what the new decade might bring and that naturally brought with it a sense of renewed optimism about what was to come.
Auction rooms were busy, we were starting to see price rises in areas that had been previously been flat and there was a sense of anticipation that this growth in prices would continue for a few months.
However, at the same time Covid-19 moved from being something that no one had ever heard of to something that started to enter the daily lexicon, particularly as New Zealand’s first case emerged at the end of February and then we all know what happened over the coming weeks.
Impact on the market
Naturally the first thing people did as Covid-19 cases started increasing in New Zealand was ask what the impact would be on the market. The obvious place to start making comparisons was the Global Financial Crisis as that was the last significant financial event that impacted economies across the world.
Initially there were concerns that that the property market would be significantly impacted and that prices and sales volumes would fall dramatically as people were unable to view properties in person and agents were unable to meet with vendors and potential purchasers face-to-face.
Fast forward a few months, a significant level 4 lockdown and a secondary lockdown for the Auckland region, we now start to have a clearer picture of how New Zealand’s property market is faring thus far.
So far in 2020, for the first 8 months of the year, we’ve seen in excess of $43 billion worth of property sold across the country and in excess of $19 billion in Auckland.
Last year the total value of residential property sold across the country was in excess of $52 billion, and in Auckland it was in excess of $22 billion.
Should the remaining three months of the year continue in a similar fashion, it’s likely we will see total value meet if not exceed last year’s total value.
Just a few months back, suggesting that we could meet or exceed last year’s total sales value was inconceivable — especially when you consider that in April sales volumes were down 77.2 per cent when compared to the same time last year!
Catching up with last year
Taking a closer look at sales volumes again shows that despite losing the best part of a month’s sales, that we’re catching up.
Last year, in the first nine months of the year 56,094 properties were sold across the country and for the same period this year, 55,919 properties have been sold — just 175 properties short of last year’s tally at this point in the calendar year.
The confidence we had going into Covid-19, Kiwis’ ability to respond quickly and positively to technology solutions and the numerous stimulus measures provided by the Reserve Bank have gone a long way to ensuring New Zealand’s property market has remained in good stead when there was high a risk that it wouldn’t.
With the Reserve Bank’s focus firmly on ensuring the wider economy remains positive, we can expect a number of the macro-economic tools the Reserve Bank has introduced to remain in place for a few more months yet, and with forecasts of interests rates dropping even further in the coming months then this may bolster the market even more.
The balance between supporting the economy and not having house price growth impact affordability even further is a constant challenge.
Looking forward, at this point in time there are no signs that there will be much change in the property market in the next few months.
Agents are still reporting that lifestyle choices remain at the forefront of many purchasers’ decision-making, be it a bigger house with a bigger backyard or a pool or whether it’s an older couple who have made the decision to downsize.
With the limited number of new listings coming to market and the total pool of available properties at its lowest level since REINZ began keeping records, many people are finding themselves waiting to list until they’ve already purchased somewhere new to move thereby further exacerbating the shortage of properties available.
We’re hopeful that as we get to the warmer months of the year that we might see an uplift in the number of listings coming to market, as people often see the summer months as a great time to sell, thereby easing the listings shortage, giving buyers more choice and reducing the pressure on affordability.
One thing is for certain though — we’re not fully out of the woods yet — there may still be wider economic impacts to come, but the property profession is ready to deal with whatever comes our way.
– Bindi Norwell is CEO of the Real Estate Institute of New Zealand