While expectations for a decline in property prices remain, residential data has so far been telling a different story. According to figures released earlier this month by the Real Estate Institute of New Zealand (REINZ), sales volumes and prices were up in July across most regions.
For more on this, here’s a quick monthly property market update for you.
Strongest July month in five years
Last month saw the largest number of residential properties sold in a July month since 2015. Sales volumes across New Zealand increased by 24.6 per cent year-on-year, and in Auckland alone, the number of properties sold was up by 30.3 per cent from 2019.
For the first time since April 2016, most regions (excluding Gisborne and Marlborough) saw double-digit percentage increases in sales volumes. The top five regions were:
- West Coast: up 57.1 per cent YOY (highest sales volume for July in 14 years)
- Tasman: up 55.7 per cent YOY (highest sales volume for July in 18 years)
- Nelson: up 42.4 per cent YOY (highest sales volume for July in 27 years)
- Waikato: up 34.8 per cent YOY (highest sales volume for July in 5 years)
- Taranaki: up 30.8 per cent YOY (highest sales volumes for July in 17 years).
Pricewise, July marked 106 months in a row of year-on-year national median price increases, with all regions seeing a rise and four regions (Waikato, Gisborne, Manawatu and Taranaki) achieving record median prices.
High levels of interest and engagement
In commenting on the data, REINZ chief executive Bindi Norwell said that figures show “just how confident the market was in July.”
“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 their property,” Norwell said.
On the other hand, she couldn’t help but note that the horizon isn’t clear of clouds, especially with cases of Covid-19 starting to emerge in some regions: “Even though anecdotally we’ve had a great start to August, the real question now is, how long this can be sustained for?”
How will the ‘second wave’ of Covid-19 affect the market?
That’s the big question that property experts are debating over. Economists have been reviewing their expectations over the past few months, and some were no longer predicting a downturn until next year. But now the scenario may change again.
Infometrics senior economist Brad was cautiously optimistic. “We still feel like property prices are likely to hold up better than expected. We also maintain the view that property prices are more likely to see continued softening from here on, but will actually dip more into early next year.”
To support borrowers further, Reserve Bank governor Adrian Orr has recently confirmed the extension of the mortgage deferral programme – a move that may help underpin the market. If you’d like to learn more, please don’t hesitate to contact us.
What about mortgage rates?
As for mortgage interest rates, some economists are not ruling out the possibility of further cuts in the next few months. Any reduction is likely to be minor compared to what we’ve seen in the past couple of years, but even so, the current sentiment is that interest rates may not move up for at least one or two years.
We’ll be keeping a close eye on any developments. If your fixed rate is due to expire soon, or you’d like to review your mortgage structure, please don’t hesitate to contact us. We’re here to help.
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