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OneRoof.co.nz
INDUSTRY VIEW
Market remains strong for now but new moves add level of complexity to months ahead Despite new measures aimed at cooling the market, New Zealanders still have a healthy appetite for property, writes JEN BAIRD.
F
igures from the Real Estate Institute of New Zealand (REINZ) shows the housing market has rebounded from the nationwide lockdown ordered in August. Buying activity has increased and prices are strong, with the shift taking place in September, when much of the country left level four restrictions. We saw median house prices for residential property across New Zealand increase by 23.4 per cent from $725,000 in October 2020 to $895,000 in 2021. Ten out of 16 regions reached record price medians, and one an equal record. The data tells us that Covid-19 has not dampened the demand for property, and buyer activity is still strong. The market’s underlying strength was again shown in the REINZ House Price Index, reaching a new national high of 4,206 (this is the 15th
consecutive month that we have seen a new high). Growth was distributed across all regions, with nine of the 12 regions reaching a record level in October. October saw the number of residential sales decrease by 21.7 per cent year-on-year. However, the sales count from September increased by 30.8 per cent, showing a market revitalised by the usual spring uplift in activity and easing restrictions. While a feeling of uncertainty around Covid-19 is still prevalent across the country, an uptick of listings and stock has given buyers more choice and heightened their confidence. Auckland’s October data make interesting reading. What we have seen is that, despite a 20.3 per cent decrease in its sales count year-on-year, people have adapted to the prolonged restrictions in Auckland. Month-on-month, Auckland’s sales count increased by 85.5 per cent. Real estate professionals have well-tested ways of working remotely and the eased restrictions around viewings have enabled more real estate activity.
Many expect to see a further rise in activity in other regions when Auckland’s borders reopen. We may also begin to see an increase in the number of Aucklanders wanting to move away from the city. Hawke’s Bay, Canterbury and the Queenstown Lakes District noted a significant uptake in out-of-town enquiries this October – predominantly from Aucklanders. The lockdown has given Aucklanders more time to browse online and look at properties and potentially more thinking space on whether living in another region is an attractive option – particularly as workplaces become flexible with working-from-home measures. Again, auctions proved a popular method of sale, with auctions accounting for 30.1 per cent of properties sold in October 2021 compared to 22.8 per cent a year prior. Virtual auctions have been effective throughout the various alert levels as they have enabled vendors to continue their sales process. Gisborne typically has a high auction count and had the highest percentage of auctions across New Zealand,
Potential headwinds: REINZ chief executive Jen Baird.
“Many expect to see a further rise in activity when Auckland’s borders reopen.”
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with 48.2 per cent of properties selling by auction. Auckland was second, with 44.8 per cent of properties sold by auction, highlighting increased activity in the region. Canterbury had the third highest auction count with 41.2 per cent of sales sold by auction. Interestingly, we are beginning to see a professionwide shift towards auctions as they provide a market-derived understanding of a property’s value and open-market transparency. Over the summer period, there is some expectation that investor numbers will decrease. This may be largely due to the
recent tax changes announced on October 1 – property investors will no longer be able to fully deduct interest costs against the income they make renting out a property. These government measures to dampen investor demand, along with increasing the supply of housing through medium-density housing rules, seek to address housing affordability in New Zealand. However, they add a new level of complexity to the market that will likely play out in the months ahead. The past couple of months have seen real estate professionals navigate more than just Covid-19 restrictions. The Reserve Bank has made good on its earlier indications that interest rates will rise in the coming years, the introduction of debt-to-income ratios seem more likely, and inflation is rising – all of these factors have the potential to create headwinds for house prices. Right now, heading into the busy summer period, we expect the market to remain strong. - Jen Baird is the chief executive of the Real Estate Institute of New Zealand (REINZ)
