Covid-19 has upended New Zealand's housing market. A nationwide lockdown slowed buying and selling activity but now that the country's real estate sector is open for business again, where do property values stand?

Buyers are still curious and the number of property searches on OneRoof.co.nz have increased significantly over the past two weeks, and government relief measures mean that predictions of a New Zealand-wide property crash - where prices drop 20 percent or more - are off the cards.

Our latest valuation figures, in the interactive below, show suburb values on March 25, just before alert level 4 restrictions came into effect, and are our new benchmark, against which we will measure future market activity and gauge where house prices will land post-Covid-19.


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The value figures coupled with historical data and economic insights suggest certain locations and property types will be better placed to weather the crisis than others. Here then are our five big predictions for the housing market.

1. Wellington will be the strongest performer

Employment opportunities will be the biggest determining factor in house price performance in the months ahead as Kiwis move from smaller regional centres to the big cities in search of work.

Gareth Kiernan, chief forecaster at economics analysts Infometrics, says Wellington has the highest number of government sector jobs, which puts it in a stronger position than the other major metros.

“Public sector is such a big employer in Wellington and the Government is unlikely to be laying off people unlike the private sector,” he says.

James Wilson, director of valuation at OneRoof's data partner Valocity, says Wellington went into the lockdown enjoying strong value growth. This was fuelled by a lack of stock on the market, something else that could shield the capital's housing market.

"Low stock was notable in Wellington post GFC and this helped keep values relatively buoyant."

Kiernan says Dunedin and potentially Palmerston North will also be protected due to the strong educational sector presence in both cities. “We will see an increased demand around training, re-skilling and studying to up the labour market,” he says.

Another major boost to Dunedin's fortunes is the redevelopment of Dunedin Hospital. The $1.4 billion project had already positively affected the housing market before the pandemic and is unlikely to slow down post-Covid-19, Kieran says.

“I expect the housing requirements for construction workers to be pretty significant over the next seven years or so. The Government is pretty committed to that project and stimulating the economy and don’t think they’d want it to be delayed,” he says.

2. Variety will save Auckland

While Auckland doesn't have as much public sector presence as the capital it does have by virtue of being New Zealand's biggest city more employment opportunities.

The city's housing market will be challenged but because it isn't wholly dependent on tourism or other at-risk sectors, it won't see huge price swings.

Wilson says Auckland isn't just one housing market either, which has the biggest suburb variety and they each will handle the effects of Covid-19 differently.

“There a lot of jobs in the CBD, South Auckland, Manukau and they’ll perform well,” he says.

3. Agriculture beats tourism

Regions that have big agriculture and forestry sectors, such as Hawke's Bay, Waikato and parts of Canterbury, are also unlikely to see huge market falls.

“If you have strength in dairy, sheep and beef, well the demand for those products internationally, particularly from China, is still going to hold up reasonably well. I am still expecting price falls and softer condition that what we saw previous years,” Kiernan says.

However, Canterbury was “a bit unusual” compared to other agricultural centres. “It’s still working its way through the after-effects of the earthquake and it’s oversupplied in housing the closer you get to Christchurch,” he adds.

The tourism boom was responsible for rising prices in Queenstown and neighbouring Wanaka high, but Covid-19 has brought the region to a grinding halt. The ban on foreign arrivals and the month-long lockdown have pushed Queenstown's economy into uncertain territory.

Kiernan says Rotorua and Taupo may not be as exposed as Queenstown, though. “Rotorua is a bigger urban centre than Queenstown and has more services for rural centres around it, which of course helps drive the economy, while Taupo has always been more reliant on domestic travel,” Kiernan says.

4. Hot investor markets at risk

Regional housing markets that saw an influx of out-of-town investors on the hunt for cheap property - Whanganui, Gisborne and Timaru - will experience a noticeable slow down and drops in value.

Kiernan expects the demand for investor properties to be on the soft side due to uncertainty. Out of town investors may be waiting out for 18 to 24 months until they score bargains, he says.

“There’s a growing expectation among people that prices will be coming down and as an investor that’s how you make a big chunk of the money – through capital gain and you don’t want to expose yourself to price falls there.”

Wilson says investors will shift to areas with better longer-term return on rentals and employment opportunities, which is typically urban centres of New Zealand.

5. Leafy suburbs the ones to watch

Kiernan says people who can afford properties in prestige neighbourhoods are less sensitive to an economic crisis.

“If you are a Kiwi earning overseas, New Zealand now looks like a good place to be. I can understand how demand for prestige homes continues, not indefinitely, but for the next six month or so.”

Properties in Auckland's Double Grammar Zone suburbs, such as Remuera, Epsom and Mt Eden, will also be more resilient to the crisis, Kiernan says.

“They won’t be unaffected, but it might just take longer for the downturn to come through.”