Housing is still in short supply across New Zealand, with stock shortages likely to continue as we head deeper into 2021. While the value of existing housing stock rose by 11% in 2020, at a rate four times higher than the annual GDP, strong prices have failed to dampen demand in what is still a high-pressure environment. The combination of low interest rates and a lack of international travel have helped to drive prices higher, with strong demand ignited by low housing supply in 16 New Zealand regions.
According to data from Realestate.co.nz, housing stock was down year-on-year in almost every New Zealand region based on December results. Across the country, 16 of 19 regions reached record low stock levels since records began 13 years ago, with the national stock level also at an all-time low. While December saw a sharp 19.2% increase in new listings, overall, the strange year that was 2020 added to housing pressures rather than reducing them.
According to Vanessa Taylor, spokesperson for Realestate.co.nz, “There were 29.1% less homes available for sale at the end of last month compared to December 2019, creating a significant mismatch in supply and demand. We’re still seeing a lot of competition in the market and I expect this will continue to drive strong prices in the first quarter of 2021, encouraged by low mortgage rates and a lack of international travel."
At the moment, the New Zealand housing market is helping to hold the national economy together. According to separate data from CoreLogic data published by the Reserve Bank, the total value of New Zealand’s housing stock reached $1.28 trillion in the September 2020 quarter. To put things into perspective, that is four times the annual GDP of $321 billion. Average asking prices went up 13.6% compared to 2019, with record highs reached in the Bay of Plenty and Central North Island regions.
The average asking price for a New Zealand property was $799,190 at the end of 2020, which is much higher than the December 2019 price of $703,780. “Asking prices nationally are now $95,410 more than the same time last year,” said Ms Taylor, adding that “Although this might be welcome news for sellers, it may not be time to celebrate just yet.” The strong movement in prices comes during very uncertain times, and with less stock available than ever before, lots of Kiwis will simply be left out of the market.
There were only 12,932 homes available for purchase in New Zealand at the end of 2020, which is almost one-third less than the same time last year. According to Ms Taylor, “Only Auckland, Gisborne and Central Otago/Lakes avoided hitting 13-year record stock lows in December," with the stock shortage likely to prove challenging for buyers throughout the remainder of 2021: “This is a long-term factor impacting the New Zealand market and the number of Kiwis returning from overseas, combined with low mortgage rates and lack of international travel, are only adding to the demand for property.”