{"id":29788,"date":"2020-12-23T21:05:38","date_gmt":"2020-12-23T08:05:38","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=29788"},"modified":"2024-03-01T20:47:56","modified_gmt":"2024-03-01T07:47:56","slug":"new-zealand-property-market-is-going-nuts","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/new-zealand-property-market-is-going-nuts\/","title":{"rendered":"New Zealand property market is going NUTS"},"content":{"rendered":"

PHOTO: Bindi Norwell, Chief Executive at REINZ\u00a0<\/strong><\/p>\n

REINZ: New Zealanders spend $12 billion more on residential property in 2020<\/strong><\/p>\n

The annual review of New Zealand\u2019s residential property market<\/a> in 2020 has shown a 24.7% increase in overall spend from $48.7b for the 11 months ending November 2019 compared $60.8b for the 11 months ending November 2020, according to the latest data from the Real Estate Institute of New Zealand (REINZ), source of the most complete and accurate real estate data in New Zealand.<\/p>\n

In Auckland, the increase is even higher, with a 40.8% increase from $20.8b for the 11 months ending November 2020, to $29.2b for the 11 months ending November 2020 \u2013 an additional $8.4b.<\/p>\n

Bindi Norwell, Chief Executive at REINZ<\/a> says: \u201cThe 2020 property market has performed in a way that we may not have expected just 11 months ago. The results have been influenced by a number of key themes including:<\/p>\n

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  1. COVID-19<\/strong>\u00a0\u2013 the impacts of this year\u2019s global pandemic, the various alert levels and lockdowns that New Zealand went into have all impacted this year\u2019s property market, however, not in the way that many people, economists and commentators were initially expecting<\/li>\n
  2. No international travel\u00a0<\/strong>\u2013 it has been estimated that approximately $10 billion that would have been spent on international travel this year has instead stayed in the country and been diverted to other areas, such as property<\/li>\n
  3. LVRs<\/strong>\u00a0– The Reserve Bank\u2019s decision in April to remove LVR restrictions for a 12-month period to support the financial stability in the economy \u2013 this has been a key factor in invigorating the market, particularly as it approaches re-introduction and buyers hurry to make a purchase before these restrictions are placed again<\/li>\n
  4. Low interest rates<\/strong>\u00a0\u2013 encouraging more investors into the market, as better returns will be made than having money sit in the bank<\/li>\n
  5. Auckland effect<\/strong>\u00a0\u2013 experiencing an uplift in median prices after three and a half stable years around the $850,000 mark. Median prices started lifting in late 2019, and reached the $1 million mark in October 2020<\/li>\n
  6. Increasing unaffordability<\/strong>\u00a0\u2013 New Zealand\u2019s urban housing market is considered \u2018severely\u2019 unaffordable according to the Demographia International Housing Affordability survey, as median house prices are more than seven times the median income<\/li>\n
  7. Continued strength of the regions<\/strong>\u00a0– in terms of price growth with increased demand and a lack of supply of properties, putting pressure on prices in some areas, particularly as buyers in the lower price brackets were priced out of the main centres<\/li>\n
  8. Record low OCR<\/strong>\u00a0– and low bank lending rates has meant eased accessibility for more first-time buyers, however, we are still hearing that accessing finance is a barrier for many<\/li>\n
  9. First time buyers\u00a0<\/strong>\u2013 have become more active in the market with lending to first home buyers up 26.7% from $1,102 million October 2019 to $1,396 million October 2020 according to the Reserve Bank<\/li>\n
  10. FOMO<\/strong>\u00a0– Increasing sales volumes and decreasing stock levels have created an intensified\u00a0fear of missing out<\/em>\u00a0for some purchasers, encouraging more people into the market, trying to secure a property before prices increase too much or options \u2018run out\u2019.<\/li>\n<\/ol>\n

    \u201cThis year has been an interesting one for the real estate industry \u2013 we\u2019ve seen record median prices reached in many parts of the country, with November itself seeing 11 new regional records \u2013 the likes of which we haven\u2019t seen since October 2003 when the market was seeing significant increases in house prices,\u201d says Norwell.<\/p>\n

    \u201cThe increasing prices across the country combined with the increasing sales means that when we look at the total value of property sold in the 11 months ending November 2020 compared to the same period in 2019, we see a 24.7% increase, showing that the overall spend across New Zealand in the property market has increased significantly from $48.7b to $60.8b.<\/p>\n

    \u201cWe are expecting 2021 to see ongoing regional growth as workplaces become more flexible, remote work continues and New Zealanders settle into the \u2018new normal\u2019. This year has certainly highlighted further that we need a consolidated industry and government response to help address housing unaffordability across New Zealand,\u201d concludes Norwell.<\/p>\n

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    Median Sale Price<\/strong><\/p>\n