“During the past month we have had a strong increase in new listings coming to the market. While this provides more choice, it also enables competition for properties on the market. Our auction success continues to be strong based on the transparency of pricing.”
Ray White Zone Chairperson for Northland.
New Zealand has now moved into the protective framework known as the red traffic light system across the country. This is the government’s latest response to managing suppression of the COVID-19 pandemic and providing enough safety frameworks for the economy to continue to operate and for fewer restrictions given vaccination levels across the nation.
There have been several announcements regarding managed isolation and quarantine facilities and the pending international border changes for Australia and for many other parts of the world, which expect to see borders becoming less restrictive from mid-March 2022.
For the real estate market, while there are safety protocols in place, there has been a continuance of open homes and safe property viewings. Sales numbers decreased over the same time last year, however, prices have remained strong and there has been a continued upward trend in property values.
We have seen a noticeable increase in new listing activity, allowing purchasers to come into the market with confidence of choice. While there are prevailing headwinds around interest rates and the higher barriers for lending, the surge in property prices lifting by 27.5 per cent across New Zealand in the last 12 months shows the purchasing of residential real estate continues to outweigh most of the current headwinds within the market.
Housing confidence is largely underpinned by price increases connected to the affordability of buying a home and maintaining mortgage requirements. In the latest ASB Housing Confidence Survey, while the overwhelming majority of New Zealanders expect interest rates to keep rising, most of those who took the survey predicted that house prices would also keep rising. While the number of people who believe it is a good time to buy a home has decreased, 62 per cent believe house prices will increase in the next 12 months. The overriding message from the survey is that while interest rates are rising, the market can handle the expected changes and absorb those through house price increases.
One of the key areas of interest for many is the area of the first home buyer. Largely measured through their activity to be able to raise a deposit against house prices which continue to rise in some areas quite sharply.
Since changes to the CCCFA took effect on 1 December last year when the responsible lending code was updated, there has been some difficulty for first home borrowers to get into their own home, even after some of them had received approvals.
In looking at the Reserve Bank lending data up until the end of last year, it suggested first home buyers continue to remain active in the market even considering the barriers.
The figures showed banks approved 2,624 mortgages to first home buyers and, as an indication, it was 21 per cent down on the December 2020 mortgage lending, which saw 3,338 approved first home buyers.
But when you look at the numbers there has been a downturn in overall activity, particularly evidenced in December when the numbers were down by 29 per cent in comparison to 12 months ago, where mortgage lending to first home buyers is down 21 per cent year-on-year which means there could be a slight increase in approvals to first-time buyers in percentage terms.
The first home buyer provides a number of positives in regards to purchasing while also taking some pressure off the rental market. In December, the overall share of the first home buyer was 28.8 per cent with loans above 80 per cent. On average, the first home buyer purchases property valued at $744,000.
The market in the last quarter has seen properties rise by an average of 6 per cent. Overall, in the last 12 months, the average price across New Zealand has risen to $1,028,097. This is an increase of 27.5 per cent which backs onto the previous year with an average across New Zealand of 28.8 per cent.
In their latest report, CoreLogic acknowledge there are mixed results even across the main centres, with sales numbers down. However, the continued strength of pricing in the Auckland market and the continued growth in Christchurch may have run its course given such high increases have been achieved.
They also make note of the average property value in Hamilton and the annual growth rate in Tauranga which has increased by 31.3 per cent during the last 12 months, however has slowed since October 2021.
In the regional areas, price growth in the past quarter saw Whangarei hit a high of 8 per cent closely followed by Rotorua with a quarterly increase of 7.3 per cent. This, however, didn’t translate annually for Rotorua which has been more recently discovered in respect of value, with an annual increase of 18.9 per cent. As opposed to areas such as Hastings and Napier in the Hawke’s Bay region which have had annual increases of 30 per cent or more.
Property values in Queenstown and Lower Hutt represented the smallest rises over the quarter and both had a negative change in property values for the month of January 2022.