19 Aug How the property market performed during lockdown

Posted at 10:55h in Property News by

Read on for our latest update on the New Zealand property market.

As was widely expected, REINZ’s April 2020 data show an unprecedented decrease in the number of properties sold across the country during lockdown: down 78.5 per cent from April 2019 (and down 82.4 per cent excluding Auckland). But so far, house prices have held up.

Read on for our latest update on the New Zealand property market.

Covid-19 pressing pause in all regions

With the entire country being in complete lockdown for the first 27 days of the month, the drop in annual sales is anything but surprising.

Overall, 1,305 properties were sold across New Zealand last month, with half of them being purchased in the first 10 days of lockdown.

Among the regions that experienced the largest decrease were Southland (-92.1 per cent), Nelson (-91.5 per cent), Manawatu/Wanganui (-87.2 per cent), and Gisborne (-86.6 per cent). Interestingly, the Auckland region was the least impacted by Covid-19, with ‘only’ a 68.8 per cent drop in annual sales.

Lockdown likely to impact May data as well

According to REINZ chief executive Bindi Norwell, property data is unlikely to show significant recovery in May.

While activity has resumed under Alert Level 2 (including open homes, sales-and-purchase agreement negotiations and in-person auctions), the next set of data will largely depend on the number of new listings and consumer confidence levels.

“Talking to our members around the country, there are good levels of activity starting to occur with both first-time buyers and investors active in the market, which is a positive sign,” said Norwell. “However, we caution over being too optimistic until we get a few more months’ data, as many of the sales in April will have been negotiated during March, so it’s likely to be another month or so until we really see the full impact of the lockdown.”

House prices ‘less volatile than expected’

Despite lower sales volumes, the national median house price increased by 17.2 per cent year-on-year, moving up from $580,000 to $680,000.

Three regions (Hawke’s Bay, Wellington and Nelson) recorded all-time-highest median prices, and even Auckland saw its second-highest median price on record at $925,000 (+9.2 per cent from last year). But as Norwell noted, these figures probably relate to the types of properties sold.

“Looking into the details of these regions, it’s more to do with uplifts in the upper sales price brackets than an uplift in the underlying value in these regions,” Norwell said. “However, time will tell what the true impact has been.”

Opportunities ahead for buyers who are ready to seize them

With no LVR rules in place until April 2021 and some lenders lowering their fixed rates even further, some first-home buyers may now be better-positioned to seize property opportunities in the next few months. And according to Trade Me, this could explain why an increasing number of younger buyers looked at online listings in April.

Now that property sales activity is allowed to pick up again, it will be interesting to see how supply and demand interact. If you (or someone you know) are ready to go house-hunting again, here are the guidelines issued by REINZ on 14 May 2020. In a nutshell:

  • Open home & rental viewings: No more than 10 people are allowed to be in the property at one time, including the agent or the property manager.
  • Buyers must stay two metres away from each other.
  • Auctions cannot have more than 100 attendees in total, and more than 10 people in a group.
  • Real estate agents must keep accurate records of who attends open homes, viewings and auctions for at least two months.

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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.