Wellington remains the strongest growing market of the main centres
Nationwide property values are accelerating into the summer – increasing by 1.3% last month after it already began to increase in September, CoreLogic reports.
The latest CoreLogic House Price Index (HPI) revealed that property values have remained robust despite the impacts of the COVID-19 pandemic and the lockdown.
All 21 main urban areas analysed by CoreLogic experienced value growth over the month – including Queenstown, with 0.8%.
However, Queenstown's growth only partially recovered the decrease from earlier, with values remaining 1.2% lower than that at the end of July and 5.6% below the peak before COVID-19 impacted the market.
Wellington remains the strongest growing market of the main centres, reporting 1.7% growth over the month and 2.8% over the last three months. It had also seen a four-year record of 29% of sales going to investors using a mortgage as security.
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The Treasury's New Zealand Activity Index (NZAC) also showed a 1.0% increase in economic activity in September 2020 compared to the same month last year, proving that the property market is growing at a faster rate than before the pandemic (1.1% monthly growth in February 2020).
Nick Goodall, the head of research at CoreLogic, said the support mechanisms of the government and banks helped cushion the market. The Reserve Bank of New Zealand (RBNZ)'s intervention also boosted demand and contributed to the uplift in value growth.
“Indeed, the RBNZ has acknowledged a consequence of its monetary policy is increasing asset prices, but that this is a better outcome than the counter-scenario of a loss in confidence, resulting in decreasing property values,” Goodall said.
“The next major milestone will be the end of the mortgage deferral programme, now pushed back to March 2021, but if interest rates reduce further and demand for property holds strong, it's hard to envisage a lift in motivated sellers causing values to seriously drop,” he continued.
“Certainly, short-term demand is looking very strong. According to the CoreLogic Early Market Indicators report, valuations ordered by banks for mortgages are up 11% month-on-month after a noticeable jump at the start of October. We'd expect this to persist through to Christmas at the very least.”
