COVID-19: A fall in sales volumes, but will prices hold firm?
The team at homes.co.nz recognises this is a very difficult time for all New Zealanders and the most important thing is everyone remains safe in the coming weeks and months.
However, we wanted to take a look at what may happen to the property market in response to the COVID-19 crisis and the potential impacts to homeowners around the country.
In the immediate term, we expect the sales volume to decrease significantly, but property prices to remain resilient throughout. Past economic shocks have shown that property prices have remained relatively stable with any price decreases recovered very quickly. The main reason for this is that homeowners who don’t need to sell, are happy to sit tight and play the waiting game.
Below is the trend of median sale prices during both the 2007 GFC and the 2011 Christchurch earthquake where you can see there was minimal impact on prices.
If you are currently in the process of buying or selling, take a look at REA’s guide to conducting Real Estate business during COVID-19. Although everyone is housebound, we suggest still getting in touch with your agent for more information.
CoreLogic has also released its view on the implications of Covid-19 for the property market where they also expect a decrease in sales volumes. They now predict 70k-75k residential sales next year, which is down from 85k last year and less than 88k as previously predicted for 2020. However with Real Estate deemed a non-essential service, the decrease in sales volumes could be even more significant. We’re all hopeful that the health crisis is resolved quickly, and the demand for property grows when ‘normality’ resumes, and the impact on sales volumes across the whole year is minimised.
CoreLogic also has a regular podcast discussing the latest property developments throughout this crisis, for those that are interested.
The united response from the Government and the finance sector may provide some other reasons for homeowners to remain optimistic. According to Nick Goodall (Head of Research at CoreLogic), “The Government package and RBNZ measures will go a long way to limiting the damage… the key is how long it takes us to come out the other side and get back to normality”.
Let’s hope this happens sooner rather than later, but in the meantime, the team at homes.co.nz are all set up in our home offices and will continue providing up-to-date property information to New Zealanders.
Monthly HomesEstimate Property Update
The homes.co.nz Monthly Property Update is generated using homes.co.nz’s April 2020 HomesEstimates, providing an up-to-date perspective on house values around New Zealand.
Trends in our Main Cities
Many regions saw record sales prices in the first quarter of 2020 and this is reflected in homes.co.nz’s April HomesEstimates. We expect HomesEstimates to continue increasing for the next month or so as these sales continue to be received, and until the impact of the national COVID-19 lockdown is understood.
As mentioned in our analysis of the pandemic, we expect prices to remain resilient for now, but sales volumes to take a hit. We’re all watching this space with interest.
NZ’s First Home Buyer HomesEstimate
The “First Home Buyer HomesEstimate” is homes.co.nz’s estimate of what a typical first home may cost. It is calculated to be the lower quartile HomesEstimate in a town.
How do we calculate these figures?
The homes.co.nz Monthly Property Update is generated using homes.co.nz’s monthly HomesEstimates and provides an up-to-date perspective on house values around New Zealand. By valuing the entire housing stock, the homes.co.nz Monthly Property Update can compare median values from month to month in a consistent and reliable way. Our HomesEstimates are calculated for almost every home in New Zealand by an algorithm that identifies the relationships between sales prices and the features of a property.
Established in 2013, homes.co.nz is NZ’s first free property information portal eager to share free property information to New Zealanders.