The property market appears to be performing better than expected with “doom and gloom” merchants vocal during Covid Lockdown becoming very quiet lately. However, it is very early days since Level 1 commenced and certainly lots of Covid volatility overseas shows the first battle may be won here in NZ but the war still rages. No one can really say they know how this will play out worldwide but it is unlikely air travel as one example, will ever really be the same as before CV-19.
Barfoots and other large agencies report a bounce back in sales with prices firm across Auckland although suburban variations do occur. Anecdotal comment from beach areas like Whangaparaoa Peninsula and other parts of the Hibiscus Coast indicate a 10% softening in prices and clearly anyone with a job or business under strain will be selling the “bach” for a fair price and not holding out for “top dollar” if under pressure at home. Across NZ, Wanaka and Nelson Bays which are beach type.
First Home Buyers have been VERY active and are dominating mortgage loan applications due to the attraction of low interest rates and more affordable homes becoming available from newbuild developers. Residential building consents have bounced back strongly since Level 1 started also but commercial building consents are falling. This should be no surprise to anyone at all given the impact of Covid on retail and hospitality especially but also bigger companies with “work from home” policies becoming permanent in some cases.
Apartments are another area of lower demand and sliding prices due to the impact of AirBnb revenue falling and students not taking up lodgings.
So what is going to happen? As I don’t own a crystal ball, it is not an easy question to answer!
Will the economy and property prices soften once the wage subsidy extension runs out in September? Will ex-pats returning to NZ in place of normal immigration which has now ceased cause higher demand on housing and prices to firm and not fall? Will increased demand for NZ food in the form of dairy, meat, fruit and wine offset the loss of our No. 1 earner, tourism? It does seem increasingly unlikely that we will not have an air travel bubble with Australia open before 2021 due to increased outbreaks there but why not the Pacific Islands since they have zero Covid cases?
And with rising unemployment expected after Sept wages subsidy runs out, is it not just logical that will cause a softening in the ability (not demand) of people to buy a house? Picking up on the word “ability” the demand is huge to buy a house but the banks are only approving mortgages to higher bracket income earners with good job security or a thriving business. When will they thaw their credit dept restrictions as that would open the floodgates to increased sales and likely higher prices due to competition between bank pre-approved buyers?
There is a well know saying about a glass of water can be “half full” or “half empty” dependent on your personal point of view and this market is exactly that – it is a matter of deciding whether you see opportunity (certainly FHB’s do) or are worried about the crisis now or in the near future. Where do you stand?