NZ housing market recovery has “surpassed all expectations”
Auckland’s property market has demonstrated “surprising strength” during the month of August despite its temporary return to Alert Level 3, with REINZ data showing a 16% rise in Auckland’s median house price compared to the same time last year.
Kiwibank senior economist Jeremy Couchman says the lockdown, which lasted just over two weeks, left “hardly a scratch” on Auckland’s housing market with sales holding strong and house price growth hitting double digits. He says the previously predicted market correction “won’t be as severe as previously expected,” though demand is still expected to wane somewhat towards the end of the year.
“Auckland’s level 3 lockdown did little to disrupt the housing market in August, as shown by the latest market data from REINZ,” Couchman noted. “The 7,652 sales across NZ were the highest for an August month in five years.”
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“Record low mortgage rates in conjunction with the removal of LVR restrictions have fuelled recent market resilience, as concerns of COVID-19 are brushed aside,” he explained.
“Investors and first-home buyers have been particularly active. Mortgage lending to these groups accelerated out of lockdown as they take an increased share of the action.”
Despite Auckland’s buoyancy, Couchman noted that not all New Zealand regions showed the same resilience - Otago saw a 2.9% fall in sales volumes, recording the lowest number of sales for the month of August since 2014, while Gisborne’s sales volume dropped by 31.5% - the lowest for August since 2011.
“Otago’s experience has been attributed to the tourist hotspot of Queenstown, which is doing it tough while the border remains closed,” Couchman said. “Sales in Gisborne were significantly down on last year, but prices are still growing fast.”
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REINZ chief executive Bindi Norwell says that August was an “extremely busy month” for sales, and that the housing market’s recovery post lockdown has been “astonishing, and has certainly surpassed many predictions.”
“It will be interesting to see what happens now that we’re heading into spring, as traditionally sales volumes start to lift as the weather warms up,” Norwell said.
“As we’ve already seen, 2020 seems to be defying all predictions and going against all norms at this point in time. However, the full impact of COVID-19 may not have been realised yet, particularly in relation to unemployment and the economy.”
