Red Hot Market Driven By Ongoing Housing Shortage
“The market is still damn hot and will be until buyer demand can be met,” says Derryn Mayne, Owner of Century 21 New Zealand.
Her comments follow REINZ releasing its Monthly Property Report for May which showed New Zealand’s real estate market continues to see strong overall price growth despite recent Government and Reserve Bank handbrake measures.
May saw median house prices across New Zealand increase by 32.3% to $820,000 in 12 months and up 1.9% since April. With REINZ headlining ‘house price rises continue; Auckland hits new record median price again’, five out of 16 regions reached record median prices, with Auckland up 26.9% to $1,148,000.
Nationwide, the number of residential properties sold was the highest for a May month in three years. At the same time, the median number of days to sell decreased from 58 to 30 when compared to May 2020 - the lowest for a May month since records began.
“Listings remain ultra-tight and despite the biggest building boom in nearly 50 years first-home buyers continue to miss out. So many Kiwis remain bitterly disappointed. They’re forced to pay sky-high rents when they’re desperate to secure a house and mortgage while interest rates are so low,” she says.
The Century 21 leader says every month of strong house price statistics makes Treasury’s forecast of growth falling to 0.9% by June 2022 increasingly unlikely.
“Price growth will undoubtedly slow, and possibly to single figures, but less than 1% is not going to happen as long as the housing shortage continues, consumer confidence ticks along, and servicing a mortgage remains cheaper than paying rent,” she says.
Ms Mayne says given the strength of REINZ’s latest numbers, it’s time for the Government to revisit its price caps to enable more first-home buyers access to First Home Grants and Loans.
“They were lifted slightly on 1 April, but they’re still woefully inadequate which is killing the Kiwi homeownership dream for thousands. Auckland’s new caps of $625,000 for existing homes and $700,000 for new builds are already a joke. The Housing Minister now needs to take an urgent proposal to Cabinet to revise the price caps nationwide,” says Derryn Mayne.
With the total number of houses available for sale still incredibly low, the Century 21 boss believes now is the time to sell to achieve both maximum exposure and a very strong price.