First-home Buyers Flood Property Market
First-home buyers were looking to get a foot on the property ladder in April, by taking advantage of record low interest rates and the Reserve Bank scrapping LVR restrictions , according to the latest Trade Me Property Price Index.
Head of Trade Me Property, Nigel Jeffries, said onsite activity showed younger buyers were browsing significantly more than usual. “Potential first-home buyers were keeping a close eye on the property market at the end of April and beginning of May.”
“In the week following the Reserve Bank’s announcement it was scrapping the 20 per cent home deposit requirement, the number of 18-29-year-olds browsing property on Trade Me skyrocketed by 38 per cent when compared to the same period last year. This is remarkable, especially considering we saw no change in browsing activity from other age groups.”
Mr Jeffries said supply and demand had both bounced back since New Zealand entered alert level 3, following an uncertain level 4 lockdown period. “We’ve actually seen more buyers looking at properties onsite over the last couple of weeks when compared to the same period last year. In the first seven days of alert level 3, we saw a 10 per cent jump in the number of views on properties listed for sale than in the same week in 2019.”
Demand levels varied between regions, with some parts of the country seeing a significant increase in interest. “Kiwis are closely watching the property market in the lower South Island in the hopes of grabbing a bargain. The three districts that have seen the largest jump in traffic on property listings are Queenstown-Lakes, South Otago, and Wanaka.
“Of these, Queenstown-Lakes saw the biggest change during the first week of level 3, with an incredible 130 per cent increase in the number of views on property in the district when compared to the same time last year.”
Mr Jeffries said this was expected, as the Queenstown-Lakes economy is highly reliant on the tourism industry. “Queenstown’s economy will be heavily impacted by the pause in tourism, and we expect to see the local property market reflect that in terms of price and time to sell. In contrast, regions with more diverse economies that rely on a number of industries, like Wellington, will likely see less of an impact.”
Property market predictions
Overall, Mr Jeffries said it was positive to see the market demand and supply beginning to bounce back as we exit lockdown. “With listings already starting to rebound under level 3, we're expecting there will be a boost of activity in the property market over the next few months which traditionally has been a quieter period of the year.
“We’re starting to see signs that activity is returning and we’re expecting a stronger winter period than usual.”
Looking ahead, Mr Jeffries said seeing real estate markets in other countries rebound after a period of lockdown was promising. “The pattern we have seen around the world resembles a tick shape recovery. We’ve seen a severe, immediate drop, which lasts three to four weeks, and is followed by a gradual recovery.”
House prices yet to see COVID-19 impact
Mr Jeffries said it is still too early to assess the impacts of COVID-19 on the country’s property prices. “Although property prices were strong in April while the country was in lockdown, our Property Price Index is calculated from a three month rolling average, so COVID-19’s effect on house prices will take some time to appear. As with other recessionary times it’s highly likely we’ll see large variances across the country in terms of how prices and time on market change.”
national average asking price in April was $706,250, a 5 per
cent increase from the same month in 2019 when it was
$673,950. “This marks a 31 per cent increase from five
years ago in April 2015, when the average asking price was
Auckland region goes from strength to strength
Mr Jeffries said the average asking price for properties in the Auckland region reached $959,850 in April, up 4 per cent year-on-year. “Auckland homeowners will be pleased to heat he region had another strong month, seeing the biggest year-on-year percentage increase Auckland has seen in over 12 months.”
“Unsurprisingly, supply took a hit in April, with alert level 4 putting many new listings on hold. The total number of properties available for sale in the Auckland region was down 45 per cent compared to the same month last year, and down 26 per cent compared to March.
“Auckland listing views were also down 23 per cent when compared with April last year, and 17 per cent from March.”
Zooming in on Auckland City, Mr Jeffries said property prices reflected the region’s strong month. “The average asking price in Auckland City was $1,037,550, up 6 per cent from April last year - the biggest year-on-year growth the central city has seen in over a year.
“Apartment prices in the city continued
to rise, with the average asking price for an apartment
reaching $723,100 in April, up 2 per cent year-on-year. nits
and townhouses were down 2 per cent to $632,250 and $835,100
Wellington region average hits $700,000 for the first time
Following the same pattern as Auckland, property prices in the capital continued their year-on-year rise. “The average asking price in the Wellington region in April hit the $700k mark for the first time to reach $700,200 - a 7 per cent jump on April last year, when the price was $652,950.”
Mr Jeffries said property prices increased in all districts within the Wellington region in April, with Carterton and South Wairarapa seeing strong year-on-year growth:
|District||Average Asking Price (April 2020)||Year-on-year change|
|Wellington Central||$817,100||Up 7.1%|
|Lower Hutt||$652,250||Up 6.5%|
|Upper Hutt||$644,150||Up 10.4%|
|Kapiti Coast||$647,850||Up 4.7%|
|South Wairarapa||$631,300||Up 24.5%|
“As we saw in Auckland, the number of properties for sale in the Wellington region was 50 per cent lower than April last year. Interest in the region also dropped in April, with the number of views on properties for sale decreasing 30 per cent when compared to the same month last year.”
Regions see growth nationwide
Every region across the country saw year-on-year price growth in April, with just under half of New Zealand’s fifteen regions seeing new highs. “Auckland, Canterbury, Manawatu/Whanganui, Otago, Wellington and Taranaki broke previous records.”
“The Manawatu/Whanganui region had a strong month in April, with the average asking price reaching $426,850 - up 15 per cent or $55,500 on April last year when the average asking price was $371,300.
“In Southland it was a similar story, with the average asking price at $361,200 in April, up 15 year-on-year from April 2019, when the average asking price was $313,300.”
All house types reach new
All types of houses reached record breaking highs across the country last month. “When compared to April 2019, the average asking price for 1-2 bedroom houses were up 11 per cent to $525,150, 3-4 bedroom houses rose 5 per cent to $708,000, and 5+ bedroom houses were up 8 per cent to $1,231,350.
“In Auckland, the average asking price for 1-2 bedroom houses saw a 5 per cent jump to $761,850 and3-4 bedroom houses increased 8 per cent to $992,450 from April last year.
“In Wellington we saw even greater year-on-year growth, with the average asking price for 1-2 bedroom houses rising12 per cent to $577,950, 3-4 bedroom houses up 7 per cent to $732,600, and 5+ bedroom houses up 24 per cent to $1,129,200.”
Mr Jeffries said all urban house types prices across all regions also reached new highs. “The average asking price for apartments reached a record $700,250, while townhouses hit $654,050 and units reached $484,150 for the first time.”