WHAT’S DRIVING HOUSE PRICES?
REINZ HOUSE SALES: DOWN
In April, sales nationwide plummeted by 78.5% year-on-year and in Auckland they fell by 68.8% year-on-year. This decline was because New Zealand was in level four lockdown which made it difficult for property sales to occur.
INTEREST RATES: DOWN
The Reserve Bank’s emergency OCR cut in March was passed on by the banks. Rates have now dropped to unprecedented new lows and the situation is unlikely to change in the near future.
OCR: DOWN
Prompted by the Covid-19 crisis, the Reserve Bank made an emergency 75 basis point cut to the OCR in March. This took it to a new record low of 0.25% – and it’s set to stay there for at least 12 months.
IMMIGRATION: DOWN
In a bid to contain Covid-19, the Government closed New Zealand’s borders in March. This means that what will happen with migration, which was high but trending lower, is in unknown territory.
BUILDING CONSENTS: UP
February saw consents nationwide rise by 4.7% from the month before, but that was off the back of a slight fall in January. In annual terms, consent issuance was at the highest level in 45 years.
MORTGAGE APPROVALS: UP
Reserve Bank data shows mortgage lending overall in February was up to the highest level of any February in the last five years. Investor lending was at its highest level since February 2016.
Cliff Carr
RENTS: UP
Statistics NZ’s rental price index shows rents were up by 3.4% year-on-year in March. Trade Me Property’s latest data also had rents on WWW.TMMONLINE.NZ 016 the rise, with Auckland and Wellington rents at record highs.
HOUSING COMMENTARY
by Miriam Bell
Uncertain times ahead
No-one is sure of what’s to come for the housing market as we enter the postlockdown unknown but commentators agree the market is resilient and may not be down for long, writes Miriam Bell.
N
ew Zealand may be heading out of its extreme Covid-19 prompted lockdown, but uncertainty is set to plague the housing market throughout 2020. There’s some grim predictions of what might come economically and, as you’d expect, there’s also speculation that the housing market will follow a similar path. As with the economic forecasts, there’s a broad range of opinions on how badly the market will be affected by the recession the country has moved into. These are unusual times so no-one can be too definitive. And that makes for uncertainty. But there’s also some common themes that have emerged from all the talk. And they provide some hope.
Market snapshot at lockdown Given the lockdown began towards the end of March, the latest data releases serve to provide a picture of the market in March. That means it essentially establishes a baseline for the way the market was on entering lockdown. As such it shows the market was performing strongly prior to the lockdown. In fact, it was heading guns blazing into recovery, characterised by healthy price growth and solid demand. QV’s latest data had the average national value at $728,276 in March, which was an increase of 6.1% year-
on-year and of 2.6% over the quarter. All 16 of the cities it monitors showed quarterly value growth for the fourth consecutive month, indicating market strength across the country. Likewise, in Realestate.co.nz’s data average asking prices around the country were buoyant in March. The national average asking price up by 5.0% year-on-year to a record high of $711,696 and eight regions reached all-time highs. And, according to REINZ, New Zealand’s median house price was up by 13.7% year-on-year to a record high of $665,000 in March. Additionally, eight regions – including a resurgent Auckland – also hit record median prices, after double digit annual growth. Of particular note was the data on Auckland’s market. Across the board, the data showed the former powerhouse was roaring back into contention. QV had its average value coming in at $1,066,035 in March, which was up 2.5% year-on-year and 1.8% over the quarter, while the REINZ data showed Auckland’s median house price had increased by 11.1% year-on-year to a new record of $950,000. The data from Auckland’s biggest agency, Barfoot & Thompson told a similar story: the Super City was booming before lockdown. Both the average sales price ($993,528) and the median sales price ($925,000) were at new highs, up by 6.6% and 10.6% yearon-year respectively. Barfoot & Thompson also had new listings and sales volumes in Auckland at their highest for some time. It had 1,763 new listings in March, which was the highest in 17 months, and its sales hit 1,096, which was the first time they were above 1,000 in a month for two years. REINZ also recorded strong sales activity in Auckland, with sales up by 10.8% year-on-year from 2,083 to 2,307, which was the highest number of sales in four months. But here Auckland bucked the trend. According to REINZ, sales activity nationwide dropped by 4.8% yearon-year in March, with 6,886 sales as compared to 7,213 in March last year. That was the lowest number of properties sold in the month of March in nine years.
