Property Market Set To Cool From Sizzling To Warm In 2021
Nostradamus himself could not have predicted the strange series of events that befell our world in 2020 – nor the wild trajectory of New Zealand’s property market, which has gone from “doom and gloom” to “boom and Zoom” in record time.
Even so, Quotable Value (QV) general manager David Nagel has shuffled his tarot cards, read his tea leaves, and peered into his proverbial crystal ball. Though the economic outlook remains murky due to Covid-19, he’s predicting property prices will continue to rise in 2021, though at a considerably slower rate than we are currently seeing.
“A shortage of listings, record-low interest rates, and the looming re-introduction of loan-to-value (LVR) ratios means that the property market is in for a hectic summer yet. But when the LVRs do eventually kick back in just as the weather begins to cool in March, I expect the property market will start to cool as well.
“I’m predicting we’ll see something more akin to 2019 levels of growth again, when prices increased by an average of 4-5% nationally, as opposed to the rampant double-figure growth that we’ve witnessed during the back half of this year.”
That will come as scant consolation to first-home buyers in NZ’s expensive urban centres, Auckland and Wellington, where property prices have skyrocketed even higher in recent times, but it may provide some relief for buyers in the regions.
But Mr Nagel was quick to point out that NZ’s economic recovery still faces a bumpy road ahead, and though news of a potential Covid-19 vaccine being available as soon as the first half of next year was very promising, the country might still face further lockdowns, causing even more economic strife.
“As 2020 has taught us, anything can happen. But what we’ve also learnt this year is that NZ’s residential property market is more resilient than many of us expected. While interest rates remain so low, it’s difficult – but certainly not impossible – to fathom a scenario in which prices would fall dramatically.
“Until we address this country’s chronic shortage of housing, and I have been pleased to see that Auckland is on the right track now with record numbers of consents and work on new builds, we’re likely to have more buyers than we do houses, which is only going to keep prices up.”