Real Estate Market Starting To Show Signs Of Confidence Post-COVID
Although there are predictions of some tougher times ahead for the NZ economy, a deep dive into May’s property data has started to show that there are some early signs of confidence in the housing sector according to the latest edition of the REINZ Residential Market Confidence Report.
Bindi Norwell, Chief Executive at REINZ says: “May’s data revealed that the number of properties sold has progressively increased throughout the month and listings showed solid signs of starting to return to more normal levels. The sales price to valuation ratio saw a good uplift during May and the percentage of auctions steadily increased throughout the month and is now just three percentage points behind where we were at this time last year.
“On the flip side, there is still some volatility in pricing as the market tries to find its new price point (including 3 out of 16 regions with record median prices!) and the median days it took to sell a property increased as the tail of Alert Level 4 lockdown continues to impact sales data,” she continues.
“Overall though, we are starting to see some positive signs which will be of some comfort to the likes of the banks, economists and even consumers who have been holding off selling their property until they feel like there is more certainty in the market,” continues Norwell.
Looking at bank lending, the Reserve Bank data showed that total lending to all borrower types increased by 57.1% when compared to April, but is still down 33.3% when compared to the same time last year indicating that lending is starting to pick up but still has a way to go to reach previous levels. Reflecting feedback REINZ has heard from agents around the country, lending to first time buyers has been more favourable than to investors with an uplift of 65.5% and 59.5% respectively when compared to April’s lending data. With some of the banks announcing they will be easing policies for investor lending it will be interesting to see what happens in this space in the coming weeks and months.
“It is still early days and too soon to make any calls with certainty about if the market is fully recovering. After a 24 day streak of being COVID free, the country now has a number of cases and the health experts keep warning us this figure will continue to fluctuate over the coming weeks; undoubtably knocking people’s confidence – particularly after some of the revelations around testing at the border and in isolation centres,” points out Norwell.
“Additionally, we’re still a number of months away until the six-month “mortgage holiday” period comes to an end. While a number of the banks have reported that customers are slowly coming off the “holidays” and resuming regular payments, the majority have not. The second wage subsidy is also still in effect which will be bolstering employers and employees with rent and mortgage payments over the coming weeks. So, to use a running analogy, the finish line isn’t quite in sight just yet,” she concludes.