New Zealand's property market was in a strong position and enjoying solid growth before the Government put in place restrictions to combat the spread of the coronavirus, new house price figures show.
The Real Estate Institute of New Zealand (REINZ) said March 2020 was shaping up to be one of the most buoyant for residential property, capping off a four-month run of median price increases in all 16 regions of the country and record prices for half of them.
However, the REINZ figures also reflect the halt in market activity following the Government's shutting of borders, restrictions on gatherings and businesses and, finally, a nationwide lockdown.
The market dropped to a nine-year low and sales volume fell nearly 5 percent.
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The house sale data, which captures the six-day lockdown period in March, showed 6866 residential properties were sold last month, 347 fewer than March 2018 and the lowest March sales figures since 2011.
REINZ chief executive Bindi Norwell said today that before the pandemic, the property market was in a strong period of growth and Auckland had five consecutive months of year-on-year house price growth, following two flat years.
Recovery factors
"How big the effects of Covid-19 are is up for debate, but the impact will depend on a huge number of factors including how long the country is in an alert level 4 lockdown for, the level of unemployment, consumer and business confidence levels, people's ability to access finance and finance their own mortgages and how long the wider economy takes to recover.
“What we can say is that before Covid-19 hit New Zealand’s shores, the property market was in a strong period of growth."
Unlike healthcare workers or emergency services, the real estate sector is not classified as essential and the institute has estimated daily sales of around $125 million a day are being lost.
Norwell added: “Property is a long-term investment and the market will recover; however, the question is, how long it takes to recover."
Bindi Norwell, chief executive of the Real Estate Institute of New Zealand, says that post lockdown, buyers and sellers might be keen to get back into the market. Photo / Supplied
Sales volumes across the country, excluding Auckland, were down 11 percent on the same period last year.
In Auckland, however, sales volumes for March were the highest for the four months of summer, with sales volumes up 11 percent on March last year (from 2,083 to 2,307), led by increases of 30 percent in the North Shore, 21 percent in Rodney and 18 percent in Papakura.
Sales volumes were up 5 percent in Northland and 10 percent in Marlborough, but Wellington, Nelson, Manawatu/Whanganui and Otago saw drops of between 13 and 21 percent.
High-value sales
Norwell attributes that to a shortage of listings – 2000 fewer new listings than March 2019 – as well as the six days of lockdown. Only 20,702 properties were available for sale nationally, down 27 percent or 7,526 properties on March last year, and the lowest March inventory since records started in 2007.
Sales price growth continued at a clip, with Auckland's median price of $950,000 eclipsing the March 2017 record of $900,000, and up $65,000 on February. Central Auckland's median price rose to $1.2 million, Manukau's rose to $930,000 and Waitakere jumped to $841,000.
This was driven largely by significant increases in the number of properties selling for over $1 million, up 1,073 properties to 1,376 properties, the highest percentage of high-value sales since records started in 1992. The number of $1 million-plus properties sold in Auckland was up 10 percent on last March.
The number of days to sell a property nationally was down to 30 days, 6 days faster than March last year and the lowest March figure in four years. Auckland days to sell fell nine days from 42 days last year, the lowest days to sell for the city in 43 months.
Auctions in Auckland rose to 40 percent of March sales, with 928 properties selling under the hammer - up from 514 properties last March 2019, another 40 month record.
The figures that matter
Norwell anticipates that sellers will take a "wait and see" approach when it comes to listing their property for sale.
“But for those who have decided after four weeks of being locked in their ‘bubble’ that they don’t like their house anymore, they will be desperate for the chance to move, so there may be some great opportunities for those wanting to buy and sell in the coming months,” she says, adding that new listings and virtual reality walk-throughs of properties are still going on.
Owen Vaughan, editor of NZME-owned property listings site OneRoof.co.nz, said: "Given the escalation in government Covid-19 measures in the lead-up to the eventual lockdown, starting with the closure of borders on March 15, it's not surprising there was a drop in market activity. Buyers and sellers who were well advanced in their property journeys will have stayed the course, but news of the spread of the coronavirus will have given new participants reason to withdraw.
"Housing markets figures for the lockdown will likely show bigger drops in activity but, like the figures released today, should be used with caution. The numbers that will matter most will be those that measure the market once the country comes out of lockdown. These will show the true effect of Covid-19 on buyer and seller sentiment, and until then, Kiwis should avoid making hasty property decisions."
Jeremy Couchman, Kiwibank senior economist, said the REINZ data hinted at the impact on the market following the lockdown.
"The housing market was building solid momentum in the opening months of 2020, which most likely flowed into the start of March. But sales activity looks to have hit the brakes at the end of the month when the lockdown was enforced," Couchman said.
Kiwibank's economics team is forecasting an annual 9 per cent house price fall.
"Job losses and business closures will mount. Vendors needing to sell in this environment will take lower prices, as previously motivated buyers are forced to sit this one out. A 9 per cent annual house price fall would be similar the low seen during the GFC," Couchman said in an analysis of today's data, just released.
- Additional reporting Anne Gibson, New Zealand Herald
