Nz Property Market Rebound
There is growing evidence of a strong bounce-back in the residential property market.
1 December 2020
It says profit-making resales of houses have increased nationally to 96.8%. On a median national resale basis that is a gain of $229,000.
These figures are up from $220,000 nationally in the second quarter of 2020, and not far short of the record peak of $233,000 at the start of the year.
Median resale loss, or “pain”, also improved over the latest quarter, from $22,500 to $20,000. That was the smallest median resale loss in two years.
CoreLogic’s Pain and Gain Report, compares resales to the original purchase price. The national trend of strong property “gain” and minimal “pain” was replicated in most of the main centres, consistent with the broad rebound CoreLogic has also seen for sales activity and property values.
In Hamilton and Wellington, about 99% of resales in the latest quarter were made above the original purchase price, with Tauranga and Dunedin at 98%. Auckland and Christchurch also showed improvements in the third quarter.
Auckland’s share of property resales made for a slight gross profit rise from 94.6% in quarter two to 95%, while Christchurch rose from 90.9% to 92.4%.
CoreLogic senior property economist, Kelvin Davidson, says, “This report really confirms what we know is going on in the housing market more generally. Prices have rebounded strongly from Covid-19 and are continuing the upwards trend they had before the pandemic hit.
“Overall, it’s been remarkable how quickly the sentiment in the property market has turned from pessimism back in April and May to more confidence now. Low mortgage rates and the tight supply/demand balance are feeding into renewed growth in property values that we’re seeing in our resales data.
“There’s also no evidence that any particular part of the country is really suffering. The lack of any real regional variation highlights that things are pretty strong across the country.”
Houses made the biggest gains with 97.3% of house resales made at a gross profit which is pretty much as high as that figure has been since mid to late 2007, he says.
For apartments, 86.1% of resales were made above the original purchase price. Davidson predicts this positive trend will continue in the final quarter of 2020.
“On the back of low mortgage rates, I expect to see further growth in house prices and buyers competing for limited stock. Any resellers will likely have good demand, and some could continue to see multiple offers for their property, and sell for a solid gain.
“However, if we see unemployment rise in the fourth quarter led by the absence of inbound overseas tourism over summer, landlords might have a higher risk of vacancy in rental properties. If this flows through to investment property resales, investor property performance could slip a little. It’s unlikely to be major, but something to keep an eye on.” ■