‘Doom and gloom’ predictions are yet to come true, as the New Zealand’s housing market continues to perform above expectations.
According to REINZ’s latest residential property data, June prices performed better than previously anticipated, suggesting that the post-Covid downturn may be less severe than expected. However, with many contrasting factors still to play out, it might be too early for a ‘victory lap’.
For more on this, check out our new property market update.
National house prices still on the rise
Despite challenging times, June marked the 105th month in a row of year-on-year median price increases.
The national median price was up 11.3 per cent year-on-year excluding Auckland, and up 9.2 per cent including it. Auckland itself hit its second-highest median price on record (up 9.2 per cent to $928,000). Median prices increased year-on-year in every region, with Waikato achieving an all-time-highest average price of $615,000 (up 17.1 per cent).
And there are other positive signs to consider. Last month saw the highest number of properties sold for a June month in four years. It’s a promising insight, suggesting that the impact of the lockdown might finally be behind us. REINZ chief executive Bindi Norwell was quick to note that, right now, “Kiwis’ love affair with property continues unabated”, and the current low interest rate environment may have a lot to do with it.
But Norwell also cautioned against the temptation of thinking that the storm has passed:
“With wage subsidies and mortgage ‘holidays’ still firmly in place, and demand for good property exceeding supply, we wouldn’t be so bold as to say there won’t be an easing of pricing in the coming months when these support mechanisms come to an end,” Norwell said.
Key factors to watch closely, according to experts
Once again, the future of the property market seems to escape predictions. Economists and analysts are constantly revising their forecasts, and now most of the experts agree that a massive price drop is no longer likely.
In the coming months, it will be interesting to watch how several internal and external factors will play out with one another. Downward trends in pricing may originate from rising unemployment, wage subsidies winding up on 1st September, the effects of a recession, and a slowdown in population growth due to immigration coming to a standstill. On the upside, lower-than-ever mortgage rates, Kiwis returning home, low supply and strong confidence in the market may keep supporting prices.
Independent economist Tony Alexander has recently identified some key themes that are likely to shape our housing market in these unsettled times, including:
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