Recent sales figures show confidence is returning to New Zealand's housing market, but it is too soon to say if it's on track to making a full recovery, says the Real Estate Institute of New Zealand.
The number of properties sold in May increased throughout the month, with listings showing solid signs of starting to return to more normal levels, says Bindi Norwell, REINZ chief executive.
According to REINZ's latest Residential Market Confidence Report, sales went from 355 in the first seven days, when the country was in Alert Level 3, to more than 1300 in a week at the end of the month at Level 2.
This compares to a typical May of around 1700 properties a week sold and while the latest figures are closer to normal the report says there is still some way to go.
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The upward trend is expected to increase for the June figures, with the country moving to alert level one, which saw the end of social distancing requirements.
The report also points out sales volumes have started to show signs of recovery faster than when compared to the Global Financial Crisis.
Listings in May were significantly up, with more than 1700 listed each week. Of the 8,324 total for the month, 2583 were listed in the final week, showing vendors were thinking now is a good time to sell and that they would get a good price.
Auctions, too, showed signs of recovery, starting the month at 5.6 per cent then seeing a slight dip in the middle weeks but finishing at a “solid” 9.2 per cent of all sales, though still down on the 10.2 per cent from last May.
Properties took longer to sell, however. At the start of May they took 48 days to sell which increased to 60 days at the end of the month. The median days to sell are usually around 39 for this time of the year.
REINZ chief executive Bindi Norwell: "It is still early days." Photo / Supplied
Homes in the Gisborne area took the longest to sell, with an 81-day median, and sold fastest in the West Coast at 21 days.
Median prices fluctuated, starting the month at $665,500 and finishing at $629,000, but the report says that’s to be expected following a major global crisis and despite the volatility three regions still posted record median house prices in May – the Waikato with $598,000, Taranaki with $426,000 and Tasman with $701,500.
“These sorts of results defied many economists’ predictions around what would happen with house prices,” says the report.
“However, we still need to take one-off monthly results with a grain of salt at this point until we have more data, particularly when many economists have been predicting house price falls of around 10 per cent.”
Norwell says the positive signs beginning to appear “will be of some comfort to the likes of the banks, economists and even consumers who have been holding off selling their property until they feel like there is more certainty in the market.
“It is still early days and too soon to make any calls with certainty about if the market is fully recovering.
“After a 24-day streak of being COVID free, the country now has a number of cases and the health experts keep warning us this figure will continue to fluctuate over the coming weeks, undoubtably knocking people’s confidence – particularly after some of the revelations around testing at the border and in isolation centres.”
Mortgage adviser John Bolton says he has definitely seen rising confidence in the market with first home buyers applying in droves for finance.
Applicants are flip flopping between excitement about record low interest rates and possibly being able to get into the market, and nerves, he says.
“They never thought they’d see rates with a two in front and the prospect it might be a bit easier to get into the market but I think they’re a bit disappointed when they’re heading out there and realise that house prices aren’t falling and they’re competing with a heap of other first home buyers.”
