Against many predictions, the New Zealand property market continued to buck the trend throughout August, backing up Ray White New Zealand’s record-breaking July. These are extraordinary results given the somewhat turbulent times that we’re experiencing at present.
We’re pleased to report that despite Auckland entering Alert Level 3 and the remainder of New Zealand in Alert Level 2, August has followed suit for our City Apartments team with buyer demand in fact outweighing new listings coming online.
What does this mean? Put simply, buyers are reacting quickly to secure their property of choice in an attempt to beat the competition, resulting in a considerable decrease in our days on market. This trend is certainly favoring sellers coming to the market at present.
On the finance front, despite many banks remaining cautious with their lending, our Loan Market brokers are sitting on a record number of pre-approvals waiting in the wings, giving further confidence to both buyers and sellers wanting to transact now.
As we lead into our traditionally busy Spring period, there’s without doubt a positive feeling in the air with clear signs that New Zealand’s love affair for the safety and security of property continues to flourish strongly.
So, whether you’re considering selling or buying, it’s evident, the time to act is now.
Daniel Horrobin – Director of City Realty Group
Why is there buyer confidence at the moment? – Carey Smith CE of Ray White NZ
Let’s have a closer look at their commentary on the real estate and property sectors. The housing market continued to show resilience, with house prices in July up 1.5 per cent in the month to be 9.4 per cent higher than a year ago. The number of properties sold in July increased by 21.6 percent from a year ago, recording the highest number of sales in July for 5 years.
Pent-up demand from a period of restricted real estate activity in April and May, along with accommodative monetary policy has contributed to the strength in buyer interest in recent months. Median house prices rose 14.8 per cent on an annual basis in July and, at $660,000, have largely retraced the fall seen in May, which reflects the strong level of interest from buyers. Median days to sell fell 7 days from July 2019 to 24, which is the lowest for the month of July in 4 years.
The housing market was stronger than expected in recent months, which poses upside risks to our forecasts. However, we expect the deteriorating labour market and the impact of lower migration from continued border restrictions to lower house prices in the year ahead.
The recent outbreak of community-transmitted cases of Covid-19 in Auckland will also be adding increased uncertainty in the mix, particularly if the current period of heightened levels of restrictions on activity is extended. In the same way that there are a number of reasons for increasing supply, there are also a number of reasons for the current buyer demand.
Underpinning this demand is the significant impact the current lending environment provides.
With interest rates at all-time lows and with banks being supportive residential home buyers, we are seeing many purchasers wanting to take advantage of these factors. Obtaining secure credit on excellent terms while they are available is certainly influencing demand. This is not only the case with first home buyers but across all sectors of the market, which have also been helped by the easing of LVR restrictions for the short-term. Fortunately, we continue to see confidence in buyers with job security working in industries not materially impacted by the current economic environment.