The New Zealand property market has been performing well despite the global pandemic, with national sales prices rising in July on both a monthly and annual basis. While Auckland prices were down slightly over the month, sales volume is up across the country and prices look like they're holding up better than expected. The possibility of a second COVID-19 wave is sure to have an effect, however, with the resurgence of community transmission in New Zealand likely to threaten the market's surprising recovery.
According to data from the Real Estate Institute of New Zealand (REINZ), national median prices rose 15% in July on an annual basis, from $575,000 in 2019 to $660,000 last month. Contrary to many pessimistic forecasts, national prices were also up for the month at 3.4%, although Auckland prices did slip in July by -0.1%. With 11.5% growth recorded over the year, Auckland's median sale price now sits at $920,000.
In the North Island, Gisborne recorded the strongest growth for the year at 36% to $483,000, followed by Taranaki at 23.9% to $446,000, Manawatu/Whanganui at 19.6% to $442,500, and Hawkes's Bay at 17.5% to %550,000. As you can see, prices are still ticking over at record rates in some places, although growth is likely to be softer in the months ahead. While growth was more subdued in the South Island, West Coast and Southland both recorded great results at 27.8% and 20.5% respectively over the year.
Housing market growth has not gone unnoticed, although predictions are on shaky ground thanks to the return of COVID-19 cases. According to the latest statement from Kiwibank: "The housing market looks to be back on track. But is it about to be derailed again? The return of community transmission of Covid-19 adds uncertainty to the housing market outlook. Despite the developments of recent days, we were already forecasting house price falls by the end of the year. Population growth is evaporating from closed borders and the labour market will deteriorate."
Westpac are a little more optimistic, with senior economist Michael Gordon recently saying: "We expect some renewed softness in prices by the end of this year. However, it is now looking unlikely that the market will be as weak as our original 7 per cent decline forecast. We will be shifting our forecasts to a 2.5 per cent decline between now and the end of the year." No-one knows exactly how the market will react, however, with the property market responded very differently to lockdown than other parts of the economy.
Sales volume is a great indicator of price movement and overall market activity, with the median number of days to sell a property nationally decreasing from 41 to 34 in July, which is the lowest July result in four years. According to REINZ chief executive Bindi Norwell: "Even though anecdotally we've had a great start to August, the real question now is how long this can be sustained for... Part of the sales volumes can be attributed to post-Covid pent-up demand but underpinning this activity during July was strong levels of interest and engagement from all buyer levels including first home buyers, investors and families looking to upgrade."