Returning Kiwis buoy market
Returning Kiwis underpinning strangely staunch real estate market
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Not even Covid-19 has been enough to stop the Kiwi love affair with real estate, as the market enjoys its strongest June for property sales in four years.
According to the Real Estate Institute, the market has defied all expectations, and most of its key metrics had returned to normal.
Returning New Zealanders were playing a big part and attendance at auctions was strong, so far eluding economists’ earlier predictions of house price falls of up to 15 per cent.
''Auctioneers are reporting competitive bidding resulting in strong price outcomes for vendors, and the total percentage of auctions exceeded the proportion of auctions we saw last June,’’ REINZ chief executive Bindi Norwell said.
A market confidence report for June said expats continued to play an important role, with some agents reporting family members in New Zealand were visiting open homes for them.
Other agents were reporting returning Kiwis buying properties sight unseen.
Other key drivers were low interest rates and pent-up demand, with lockdown causing many people to re- consider their living arrangements.
Sales in June increased steadily through the month, as did listings. Usually in June there were about 1400 properties sold each week, but most of June this year was above that, peaking in the last week at 1722.
Prices were also back to normal. At the end of June properties were selling for a median $645,000 – $5000 shy of where it was prior to lockdown. They were selling on average about 13 per cent above capital valuation, back to pre-Covid levels.
This showed buyers and sellers had found a point where they’re both ''happy'’ over property prices, the report said.
Agents were also getting more requests for appraisals, up 26 per cent on the previous month, which was back to levels seen in mid-February, when the market was extremely buoyant.
Central Otago was one of the most popular areas, with nearly half of agents reporting more appraisal requests.
New listings were below March levels but busier than the usual mid-winter levels, ending the month in the low 2200s.
Yet listings were still about 5600 fewer than at the same time last year, which indicated that people were shy of entering the market despite the high prices.
‘’Going forward, based on anecdotal evidence from agents around the country, we would expect the usual winter slow-down in listings in July,’’ the report said.
After quite a bit of volatility in May, Norwell said June’s stability was a good sign.
‘’If you talk to any of the heads of the real estate agencies around the country, the one thing they will generally tell you they want is stability in the market. No-one wants wild changes in prices or sales volumes or any other metric they measure.’’
She said it was tempting to look at June’s results and surmise that the property market would continue in the same manner.
‘’However, as we are all too aware, the full impact of Covid-19 is yet to be felt, and if economists’ predictions come true, we may see the last quarter of 2020 be more volatile than current figures suggest.’’