Bindi Norwell – CEO of Real Estate Institute. Property update!
Wasn’t the property market supposed to crash due to the Covid-19 impact? I think someone may have forgotten to actually tell the property market that.
August 2020 has seen record median house prices with the national median price up an astonishing 16.4% from 12 months ago. Eight out of sixteen regions posted record increases, led by Southland on 20.3%.
In the main centres, Christchurch has begun to pick up pace after a period of flat gains, possibly driven by a flood of investors to the city that is currently sitting quite undervalued compared to the rest of the country.
Wellington posted a 12.8% rise year on year and Auckland a staggering 16%. While Auckland has also been slightly flat over the last three years, it is interesting to see Wellington, which has had strong growth for a long period now and looked like it was coming to the end of its growth cycle, surging ahead.
So what impact has Covid actually had on the New Zealand market?
I put this to Bindi Norwell, the CEO of the Real Estate Institute of New Zealand who releases the monthly data, and she described a market which is defying the odds.
Toby: August was host to the Auckland Level Three and country Level Two lockdowns. From the data out of August, what impact on the data are you seeing, if any?
Bindi: “The number of properties sold in Auckland during August increased by 44.2% year-on-year (from 1,812 to 2,612) – the highest for the month of August in 5 years suggesting that the Level 3 lockdown had little impact, if any on the Auckland market. We would put this down to the adoption of digital tools from both a real estate industry perspective and a consumer perspective. There has been a real willingness to adapt and be flexible as a result of COVID-19.”
Toby: Christchurch has seen some strong gains beginning to emerge, what do you put this down to?
Bindi: “Christchurch’s property market has been stable for some time now, but it’s starting to show all the signs of a market that is going to see pressure placed on affordability in the coming months. Underpinned by low interest rates, the removal of LVRs, Kiwis returning from offshore and an uplift in interest from both investors and first time buyers are all playing their part at the moment.”
Toby: In the regions, Southland has had some recent bad news on a possible Tiwai closure, are you seeing any impact there?
Bindi: “At this point we haven’t seen an impact of the possible closure on the market. Overall, median prices in the Southland region reached a record high of $373,000 in August and Invercargill’s median price fell ever so slightly from $369,500 in July to $369,000 in August – just a -0.1% fall. At this point, predictions for the market to continue being busy over the next few months and then slow down for the usual summer break. However, it’s 2020, so I think we can expect the unexpected.”
Toby: Do you think there is an impact on the market from returning Kiwis and if so, where are you seeing this most?
Bindi: “So far there are estimates of more than 30,000 Kiwis have returned from offshore and the reality is that they all need somewhere to live – be it with family, friends, a rental or purchasing a property – so undoubtably there will be an impact. We’ve heard lots of stories of Kiwis buying properties ‘sight unseen’ in order to secure a place to live on their return, and with people potentially wanting to spend Christmas with loved ones, we may see this trend continue for the next few months.”
All the August results including your region and city can be found at REINZ.