Market Update September 2021
With the release in the last 24 hours of the latest REINZ data relating to sales made in August, the public here in New Zealand can be forgiven for being completely confused.
Literally a few days prior to the release of the latest actual sales data, headlines in mainstream media were quoting a major property valuation source as saying, “Lockdown won’t lead to a fresh housing market boom”. Similar comments were echoed by other spokespeople from some of the online portals indicating that the trend for asking prices was flattening and perhaps dropping in some cases. This type of market commentary no doubt gave a few souls hope that the rampant property market we were experiencing prior to the latest lockdowns was perhaps slowing. However, reality will have once again hit home with the release of August sales data from REINZ. The facts show that nine of the 12 regions around the country hit new record highs in terms of sale prices. In fact, the REINZ headline and data shows that the latest lockdown has not dampened demand for or confidence in the housing market. If anything, the latest lockdowns are exacerbating the issues. By now it would be apparent to most people that our primary issue within the market is a simple case of supply and demand, and that is not a simple issue to resolve, let alone resolve quickly. The demand side is driven, in my opinion, primarily from the housing shortage. It is a combination of the shortage we had prior to the outbreak of Covid in early 2020 magnified by the simple fact that MIQ turns out 4,000 odd beds twice a month with Kiwis returning to New Zealand. These people also need somewhere to live. Low interest rates, readily available money, and all the myriad of other aspects of life that usually create some demand for houses are just additional influences that are further impacting on the basic underlying reason for the initial demand. People are typically not purchasing houses just to have them sit empty. Whether you are an owner or an investor, you are in the market for property because you are wanting to have people living in the property. Consequently, when we are required to go into lockdown, the consequences of this are effectively just like a dam in a river, everything builds up until the dam is released or else it will overflow naturally. As well as the dam effect, lockdowns are also hindering the supply chain and slowing the ability of the housing industry to get the materials they need to at least attempt to add to the country’s housing stock