Real estate agents and commentators believe New Zealand’s rapid shift to the highest Covid alert setting under the traffic light system won’t put the brakes on the summer housing market – but some have warned that the impact of the expected Omicron surge is hard to predict.
Tom Rawson, co-owner of the Ray White Manukau franchise in South Auckland, said the upping of New Zealand’s alert levels was “inevitable” and had already been baked into people’s buying and selling decisions.
“People were expecting it, so it hasn’t affected market confidence. It’s the same today as it was yesterday,” he said.
Rawson said his offices had not switched back to in-person auctions when Auckland came out of lockdown last year, so the restrictions on gatherings was unlikely to affect operations.
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He added that New Zealand was unlikely to see a surge in buying activity over the summer, noting that the speculators that were a feature of last year’s lockdown had left the market
“It’s not like last August when we went into lockdown. Then, bored people were on their computers buying property. There’s not people buying and selling like that now,” he said.
Agents are confident that their processes for both safe open homes and remote auctions have been honed over the past year.
Real Estate Institute of New Zealand director Jo-Anne Clifford said that agents proved their capacity for continuity through red alerts in the regions in December, and the market was still underpinned by confidence and continued demand.
“People have become accustomed to living under these restrictions and have adapted their mind-set,” Clifford said.
“On the ground, we have heard that demand and market activity remain strong, with activity maintained up until the Christmas break.’
However, she added that other headwinds - rising interest rates, tighter lending criteria and changes to investor taxation restrictions - may have the greater effect over the coming months.
Under the Real Estate Authority’s Covid guidelines, sellers can hold physical open homes in the red setting, but there are restrictions around the number of people that can gather in a single space at one time.
Belinda Moffat, chief executive officer of the Real Estate Authority, reminded buyers and sellers that while people could attend open homes without vaccine passes, restrictions would apply if no vaccine passes were required.
“If you switch between using and not using vaccine passes there must be no mingling of groups and both workers and visitors must be told whether the activity is for people with My Vaccine Pass only, or a mix of people with or without My Vaccine Pass.”
REA chief Belinda Moffat says open homes can take place under the red traffic light setting. Photo / Supplied
Not unexpectedly, banks and economists are cautious about the impact of the Omicron variant and the likely spike in Covid case numbers.
Economists from Kiwibank said they expected Omicron to hit business confidence and worsen the strain on an already tight labour market.
“Absenteeism may become a problem for many Kiwi businesses. And business confidence may take another hit,” the economists said.
Infometrics principal economist Brad Olsen warned that New Zealanders, isolated up until now from the worst effects of Covid infection, might be shocked at the disruption as Omicron takes hold across supply chains and workers from all sorts of industries have to stay home.
“For all the talk, we’ve not experienced what Covid on a wide scale is like here in New Zealand, so we don’t know how that will affect the sentiment or how we’ll operate with Omicron.”
He added that as New Zealand goes into a “here we go again” mind set, he didn’t expect Omicron to impact the housing market.
“There might be a touch of slowing back if people are not willing to go out and about, to go to open homes and so on,” he said.
Infometrics principal economist Brad Olsen: “If you were marginal before, this will spill you on to the other side of the ledger.” Photo / Supplied
“But their focus will be more on can I get a mortgage or not, irrespective of Omicron.”
Olsen said banks, already scrutinising spending and job security, will likely look harder at borrowers from industries likely to be hit hardest such as hospitality, events and arts.
“If you were marginal before, this will spill you on to the other side of the ledger,” Olsen said.
Harcourts Cooper & Co owner Martin Cooper, whose business operates on Auckland’s North Shore, agreed that while banks already use a worst-case scenario when assessing loans, “they might now look differently at someone from hospitality industry compared to someone in the toilet paper industry”.
“We’re already seeing the ridiculous lending protocols from banks, penalising too many takeaways. But fortunately, that’s being reviewed and common-sense will prevail.”
Carolyn Vernon, manager of Barfoot & Thompson’s Remuera branch, in central Auckland, said that the upper end of the market would be unaffected by the switch to red.
“At the higher end, we had people looking for homes before Christmas with $5m to $10m to spend and we haven’t satisfied that demand yet. They're still looking.”
She added that the slow start to January’s auction buying will turn around as campaigns for more new listings pick up in February after the two long holiday weekends.
