January Real Estate Hot But Settings Soon Changing
“Real estate was on fire in January. In fact, it may well prove a cracker month for 2021 given February’s snap lockdown in Auckland and LVRs kicking back in from March,” says Derryn Mayne, Owner of Century 21 New Zealand.
REINZ has released its Monthly Property Report for January which it says shows the housing market ‘busier and more buoyant’ than what would normally be expected at that time of year.
Median house prices across New Zealand were up by 19.3% compared to January 2020, with Auckland up by 14.9% in 12 months. In total, four regions and saw record median prices during January and one saw a record equal. Nationally, the median days to sell a property, recorded at 35, was the lowest for a January month in 17 years, while sales volumes were the highest for a January month in five years.
“Summer has been incredibly strong, but some key factors are changing which will have an impact. Loan-to-value ratios (LVRs) will be reinstated on 1 March, meaning a 20% deposit requirement for owner-occupiers and 30% for property investors. What’s more, later in March the mortgage holiday scheme ends which will inevitably see a rise in exit and mortgagee sales,” she says.
The Century 21 leader says the latest Auckland lockdown and Level 2 for the rest of the country will impact February’s transaction numbers somewhat, but those contemplating selling their properties should not be put off. Buyer demand remains hot, driven by record low interest rates.
“As they say, never waste a lockdown! Those vendors thinking about selling should act now. For prospective vendors in Auckland, I would encourage them to spend these days preparing their home for sale and engaging an agent. Plenty can be arranged online and over the phone, and let’s not forget real estate websites get huge traffic during lockdowns,” she says.
“REINZ’s latest numbers show an incredibly strong and active market across the country. However, that was January, and we’re now heading towards a different phase. This will include investors needing a 40% deposit from 1 May, and possibly the Government requiring them to hold their properties for longer than five years to avoid paying tax on capital gains.
“Without doubt, there’ll soon be fewer eligible buyers and possibly more stock for sale. In the meantime, many first-home buyers and investors are desperate to secure a property before the rules start changing next month. In fact, right now could prove the best time to sell,” says Derryn Mayne.