The New Zealand property market is faring well during the pandemic, with low housing stock numbers and wider economic support measures helping to buffer house price growth. To make sense of this unexpected positivity, it's important to understand how much the New Zealand housing market is driven by the discrepancy between supply and demand. Even in the current environment with zero migration, record lows in housing stock continue to push prices higher.
According to data from Realestate.co.nz, housing stock has sunk to record lows in many parts of New Zealand. Nine of 19 regions recorded 13-year stock lows in August, despite a complete lack of overseas buyers. Nationally, the total number of homes available for sale was down by 13.2% over the year and 7.6% over the month to just 17,974 listings. In the nation's two biggest markets of Auckland and Wellington, housing stock was down by 7.0% and 18.0% respectively.
Auckland and Wellington have long struggled with housing shortages, with the lack of migration seeming to have less of an impact on stock than many analysts expected. Taranaki recorded the biggest year-on-year decrease in housing stock at -48%, followed by Marlborough at -36.3%, Wairarapa at -32.3%, and Northland at -30.3%. Only a few regions recorded housing stock increases, including Hawke’s Bay with 3.1% growth, Southland with 3.2% growth, and Central Otago/Lakes with 18.0% growth.
New property listings were up across the country in August, which will have some impact on the stock shortage. Homes for sale were up 16% nationally compared to the same time last year, with this trend reflected in all but four regions. New listings aren’t having much of an impact so far, however, mostly because of buyer demand which is up 21.0% compared to August last year. While the government recent announced a new border exemption policy for people with "strong, ongoing links to New Zealand", domestic demand will remain the key driver for the housing market.
While international arrivals are unable to enter the country, New Zealand residents are driving demand as they're reluctant to relocate overseas. Other factors are also affecting demand, including low-interest rates, people escaping the city, and the removal of LVR restrictions earlier this year. The combination of low supply and high domestic demand has kept prices high, with the average national asking price up 9.1% for the month and 21.7% for the year to $824,702 in August.
Property prices in Wellington were up 4.0% to $764,482, while Auckland’s average price was down by 0.8% to $982,155. Lots of regions recorded very healthy prices despite the pandemic. Northland, Bay of Plenty, Taranaki, and Central North Island all recorded their highest prices since records began in 2007. According to Realestate.co.nz spokesperson Vanessa Taylor, “As we have seen in the cramped rental market, everyone needs somewhere to live. Given our country’s long-term housing shortage, I expect demand will remain high with both owner-occupiers and investors looking to achieve their property goals.”