Price growth continues, but signs of easing
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Price growth continues, but signs of easing
Property prices continued to climb in November, setting new records with the latest
figures from the Real Estate Institute of New Zealand ( REINZ) showing the median
house price for New Zealand at $925,000.
The median price in Auckland reached a new record in property market, the Reserve Bank’s OCR increases and
November, at $1,300,000. While the rest of New Zealand, growing challenges around financing as banks tighten
excluding Auckland, reached a record of $775,000, an their lending criteria are aligning. While the longer-term
annual increase of 26 percent. impacts of these changes will play out over the coming
months, the strength of the market suggests that the
“The market has settled back into its stride — returning growth trend will continue — albeit with a more
to business as near-usual across the board. November moderate trajectory.”
shows an active market where property prices continue
to increase, stimulated by demand as New Zealand Auctions continued to be popular across the country,
prepared to leave Alert Levels behind,” REINZ chief with 32.6 percent of properties sold at auction in
executive Jen Baird said. November. Auckland, Canterbury and Waikato had
their highest percentage of properties sold at auction
Despite an active market in November, key traits that since records began in 2005.
helped fuel the property market are starting to
disappear. More than half the properties sold in Auckland were at
auction in November ( 52.1 percent) , 40.9 percent of
property sales were under the hammer in Canterbury,
"FOMO — fear of missing and 29.4 percent in the Waikato.
out — is beginning to “While expedited by COVID-19 lockdowns, the trend
towards auctions has long been at play in the New
dissipate," Baird said. Zealand property market. Vendors increasingly see
auctions as a clean and effective method of selling
that provides open market transparency in an
“The enduring strength of property prices means some uncertain market,” Baird said.
vendors may be less inclined to act now, without fear
of missing their preferred prices later. While the supply
versus demand imbalance continues to push prices
upwards, across New Zealand inventory levels
increased 5.1 percent annually and listings increased
9.0 percent — providing buyers more choice and giving
reluctant sellers confidence that if they take their
current property to market, they will be able to buy their
next one.
“Despite steady growth, headwinds are gathering.
Government measures to moderate the New Zealand
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Could 2022 be the start of a ‘buyers market’
More options, less fear of missing out and possibly a reduction in house
prices – these are some of the top line property market predictions for 2022.
The year that was saw a drastic increase in property
prices across New Zealand, with many regions setting
multiple median price records. Although lockdowns
slowed the market and the number of property sales, it
quickly bounced back before the year ended.
As we embark on a new year, the consensus for 2022 is
that the property market will be tamer than it has been
in recent years.
A significant factor that led to soaring house prices
was the lack of supply, and although stock is still
relatively tight across New Zealand as a whole, key
areas, such as Dunedin and Wellington, are loosening
quickly, CoreLogic chief property economist Kelvin
Davidson said.
"With unemployment still low
and motivated sellers few and unemployment is low and few vendors are likely to be
‘motivated sellers’ at present.
far between, vendors may just
“However, as mortgage rates rise and credit
sit tight for a while and not conditions tighten, some vendors may eventually just
have to cave in and ‘meet the market’. Certainly, any
budge on price or even just official imposition of debt to income ratios may force
withdraw their listing." some investors who are wanting to buy extra
properties to sell more of their existing portfolio in
"However, more choice for purchasers can only mean order to stay under the cap – unless of course they
reduced price pressures in due course, and a switch to look at new-builds, which may well have favourable
a ‘buyer’s market’ later in 2022 is firmly on the cards – treatment under any [debt to income] system.”
albeit they’ll have to work harder to get the finance in
the first place,” he said. In early December, ASB Bank issued a report that
forecasted house prices will experience a cumulative
Davidson noted that the turning point in the property fall of four percent in 2022.
market appears to have been reached and he would
not be surprised to see listings continue to increase in "We now expect small falls in house prices over the
2022, with new sellers coming forward and sales second half of 2022. Given the perils of house price
activity tailing off. forecasting, the cumulative forecast fall, of around
four percent should be interpreted more as a hat-tip
“It may not necessarily become a ‘buyer’s market’ to the risk profile than a precise point forecast," the
overnight, because of course some vendors may be report reads.
stubborn in sticking to their price expectations, which if
they aren’t met could just see listings sit for longer "It’s also tiny in the grand scheme of the 35-40
and/ or be withdrawn altogether – especially since percent surge in house prices since March 2020."
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Property valuation company Valocity points to five key
factors that could make 2022’s property market very
different.
James Wilson, Valocity’s valuation director, suggests
inflation, interest rates, lending restrictions, migration
and new builds will play critical roles in the direction of
the property market.
It is no secret the Reserve Bank is trying to contain
"This will have an impact on spending habits as belts
inflation with increases to the Official Cash Rate, and
are tightened and may see some mortgage-holders
banks have increased interest rates off the back of
who bought holiday homes or investment properties
those decisions. Interest rate hikes are expected to
radically rethink their assets,” he said.
continue into 2022 and beyond, Wilson said.
The curve in migration following border restrictions at
the beginning of the COVID-19 pandemic played a
"Many Kiwis who bought part in house price growth. However, when the borders
open Wilson says there could be a “possible exodus of
property in the last seven years younger Kiwis to countries with higher wages and
better job opportunities” which could ease some
will be unaccustomed to rising pressure on the housing market.
rates, and those who bought in If recent years are anything to go by, trying to predict
the last 18 months may be the direction of future trends can be challenging. But
what is known is that interest rates will continue to
shocked when interest rates increase and are unlikely to return to those record
lows.
move beyond five per cent."
Top tips to keep cool this summer
It's definitely summer, and when it's hot outside, here are five
tips to keep cool inside.
1. Turn off lights and TVs, they emit a lot of
heat.
2. Keep the heat out by closing windows
and blinds before the sun hits your place.
3. Keep the air moving, ceiling fans and
cross ventilation works well.
4. Strategically plant trees to help keep
solar heat from direct contact with
windows and roofs.
5. Insulate and seal your house ( this will
also help retain heat in winter) .
The information contained in this publication is general in nature and is not intended to be personalised real estate advice. Before making any decisions, you should consult a legal or
professional advisor. LJ Hooker New Zealand Ltd believes the information in this publication is correct, and it has reasonable grounds for any opinion or recommendation contained in this
publication on the date of this publication. Nothing in this publication is, or should be taken as, an offer, invitation or recommendation. LJ Hooker New Zealand Ltd accepts no responsibility for
any loss caused as a result of any person relying on any information in this publication. This publication is for the use of persons in New Zealand only. Copyright in this publication is owned by
LJ Hooker New Zealand Ltd. You must not reproduce or distribute content from this publication or any part of it without prior permission.
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TM
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