Market Update - May 2021
The Real Estate Institute has just released the consolidated figures for the month of April, and as we would expect, it makes for interesting reading.
There is a huge amount of coverage in the media around the property market here in New Zealand. As we are all aware, our market, locally and nationally, has literally taken off since the middle of last year and outstripped every prediction. This is not a situation unique to New Zealand. The same is happening in a number of other countries around the globe, including Australia. Every commentator has a theory, and everyone has an opinion on why this is happening.
In all the countries with this issue, the underlying reason is simply a lack of housing stock, regardless of whether they are owner occupied or rental properties. With people wanting their own space and Kiwis returning home from overseas, the demand for property has never been greater, and this is reflected in a number of other economies and our closest neighbour. Consequently, people are having to pay ever increasing prices to obtain their desired or required accommodation.
At the end of March, the Government stepped in and announced a range of measures that they hoped would dampen down the market and slow the ever-increasing price growth. These measures were targeted primarily at one end of the market, namely investors.
The just announced results for April are the first opportunity for analysts and the market to gauge whether the introduced measures are starting to have any effect. At this stage it is too early to say what if any effect they are having. Anecdotally, there are many conflicting statements being made around whether investors are still in the market or whether they have stepped back and are just watching from afar. What I do know is that all market commentators will have their own interpretation of the data and will spin their story according….and that includes me.
Regardless, please bear in mind four things. April is always a difficult month in the marketplace. February and March are typically the highest volume sales months in a normal year. The run up to the end of a financial year spurs the sales consultants on, creating extra activity so that they finish the year on a high within their respective companies. Equally, following the Christmas break and with schools all back as well, the actual market interest and activity of people wanting to buy and sell is always high over the late summer/autumn period. So, when April comes around, everyone traditionally seems to take a deep breath and the market does as well. Additionally, we have two major disruptions with school holidays and Easter to further distract all parties. So, in summary, a normal April will typically involve fewer sales than February or March.
So, what has happened this April? Nationally, the actual sales numbers are down on March, understandable as explained above. However, the volume of sales nationally was still the highest April it’s been in the past five years. Price wise, the median sale price is down slightly nationally, in comparison to the all-time high recorded in March. But in some regions, it still climbed, and in a few it dropped slightly. So, there are some mixed messages in terms of sale price growth. This is good for buyers in that the rate of price growth might start to slow, however bear in mind that we still have an underlying national shortage of property currently on the market and this ongoing lack of supply will keep pressure on prices, while reducing sales volumes. As we head into the winter months, I expect this aspect to be exacerbated.
Here in Christchurch, our market over April has reflected the national position. The 695 recorded sales are down on the recorded February and March totals. Median sale price is recorded as $590,000, down slightly on the $600,000 recorded in March. Days on market are up slightly at 25. This last statistic is more a reflection, in my opinion, of the holiday time occurring during April rather than any market influence. Another more important indicator to look at is the HPI (house price index) for Christchurch City, and that has taken another climb to 3,084 up from 3,020 in March. This index reflects what is considered to be the underlying trends and pressure on the marketplace, and the continued rise of the HPI is an indication that prices are forecast to continue rising.
So, what does all this mean? Despite lower sales volumes in April and a minor drop in the median sale price, the underlying trends are still ever upwards, largely because a shortage of supply and the huge demand is that keeping pressure on our market for the foreseeable future.
From a Harcourts perspective, our personal sales data for April shows similar trends to the national results. However, in our case, this was the strongest April for sales results in the last 10 years. The worrying trend for us as well is the shortage of stock. Regardless of the time of year, if there is a shortage of stock available to sell, then sales numbers will undoubtably reduce and that means with the current demand, prices should keep increasing. Certainly, over the last week in the auction rooms I visited, I saw no shortage of buyers competing strongly and property was still “selling like hotcakes”.
The strength of Harcourts in the Christchurch marketplace is undeniable. If you are reading this article and thinking of selling, then no doubt you have a decision to make. Do I sell with Harcourts or someone else? If the final sale price is important to you, then consider this. The REINZ data for April tells us the median sale price achieved by all companies was $590,000. Harcourts data tells us we achieved a median sale price of $660,000 and an average sale price of $781,440. Impressive results when you consider we sell the majority of property month in, month out. If you want the Harcourts advantage working for you, call your local Harcourts consultant now and talk through the options. In this market, it’s not about getting a sale - that’s a given. But will you achieve the best possible price?