As New Zealand fights through the latest outbreak, lockdowns have impacted much of life as we knew it – now including house prices.
The latest report from the Real Estate Institute of New Zealand is out, showing that lockdown has stripped back activity in the property market, and cooled price growth in some regions.
So, how did the property market perform this September? Here’s our latest update.
Price growth slows a little
According to the report, median house prices across the country rose by 15.4 per cent compared to September 2020, to $795,000. However, this figure was down by 6.5 per cent from August 2021 ($850,000), showing some signs of cooling.
For New Zealand excluding Auckland, median house prices increased by 23.1 per cent from September 2020 – to a new record of $720,000 in September 2021. It marked an increase of 2.9 per cent from August 2021 ($700,000), suggesting that “as alert levels ease, the market is beginning to see a lift”.
Also, seven regions (Bay of Plenty, Hawke’s Bay, Manawatu/Wanganui, Tasman, Nelson, Canterbury, and Southland) reached record prices in September 2021
“Demand suppression measures introduced this year, recent moves by the Reserve Bank to increase the OCR, and COVID-19 restrictions to real estate activity are creating headwinds for house prices and we can see that the pace of price rises has slowed over recent months,” said Jen Baird, chief executive at REINZ.
Slump in sales activity, but inventory levels up
Somewhat unsurprisingly, the number of residential property sales across New Zealand dropped by 37.9 per cent in September 2021 – from 8,673 in September 2020 to 5,385 – the lowest number of sales in a September month since 2011.
Plus, excluding Auckland, the number of properties sold across the country dropped by 28.7 per cent year-on-year to 4,047. However, they were 13.8 per cent higher compared to August 2021 (2,557).
This was likely be due to the increasing use of technology to help buyers in the property market. “It’s interesting to note that the drop has not been as sharp as in the first full lockdown back in 2020,” said Baird. “The use of digital solutions across the real estate profession has enabled activity to carry on to a degree, with virtual auctions continuing throughout September.”
What’s more is that while inventory levels for properties on sale remain at historically low levels, they went up in September 2021 – by 9.5 per cent from August 2021.
Baird added that this “is great news for buyers” and sales activity may also increase soon, “as more real estate activity was allowed and those thinking of selling their homes had the confidence to bring them to market. We expect to see this same pattern as restrictions slowly ease for Auckland.”
What might we expect in the near future?
“What the data shows is that confidence remains high, buyer demand is still strong, and outside of Auckland, buyers will be pleased to see more property coming to the market,” said Baird. “We expect to see this reflected in the data post-lockdown as more properties are listed resulting in an increase in sales.”
Plus, according to ANZ senior economist Miles Workman, the September 2021 report was largely as experts predicted, but the monthly rate of price growth may be turning around from its peak, and that inflation may likely slow over the next few months.
However, it’s important to note that only time can tell what may happen – with the government’s lending restrictions, OCR increase, and other policy changes in the mix with continued low inventory levels, “it’s a fine balance”.
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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.