PHOTO: Queenstown, NZ | GETTY
The last time we produced this report three months ago, uncertainty about how the property market would emerge from lockdown was still high. Indeed, sales volumes were looking a little fragile, and values themselves had also dropped slightly in certain areas. However, roll forward three months, and it’s been striking how quickly the situation has turned more positive.
In fact, sales volumes in September were nothing but exceptional. The estimated total for both agent and private sales of 9,666 was the single strongest month for more than four years, and it ranks sixth in the list of most active months dating back to May 2007. To be fair, given that year to date volumes are essentially at parity with the same stage in 2019, there is probably still some ‘catch up’ growth taking place after the lull of April/May. Even so, considering the current economic environment, they’re still some impressive sales figures.
Moreover, sales volumes may have been higher still, if not for the shortage of listings actually available on the market. With mortgage credit still accessible, and interest rates low, the strength of buyer demand is not giving that listings situation any time to resolve itself, and this is feeding through into higher prices. The General Election has also obviously been and gone, with no material effect on the market.
The third quarter of the year saw a continued strong presence for first home buyers (FHBs) and mortgaged multiple property owners (MPOs, or investors) in the market, but existing owner-occupiers (movers) continued to sit on the sidelines in many cases. For investors, the ability to enter with a 20% deposit now, rather than the previous 30%, has been a factor – alongside the low returns available on other assets, such as bank deposits. Their share of purchases in Q3 was 26%, the highest since 28% in Q3 2016.
Meanwhile, FHBs are making use of KiwiSaver for their deposits (or at least part of it), while would-be OE’ers who are now instead purchasing a property are also helping to boost overall FHB demand. In fact, the share of property purchases in Q3 made by FHBs was 25%, up from 23% in Q2, and the highest figure in the history of our Buyer Classification series (topping the previous peak of 24% in 2006-07).
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