Take a look at our property market update video as we explore the latest trends in the New Zealand property market, including the expected impact of the nationwide lockdown.
There are signs that sales activity has passed the peak, but the slowdown is gradual. The recent lockdown could cause dislocation, initially with a trough before bouncing back.
Momentum for property values continues to ease as affordability constraints bite. However, the pace of growth is still relatively high by past standards.
The market share of mortgaged investors continues to decline and faces extra pressure in this cycle from the Government tax changes at the end of March. This means that first home buyers have been enjoying a little less competition when trying to purchase properties.
The economy as a whole is back into lockdown-related gyrations, with the hospitality industry under pressure. However, generally speaking, it’s still resilient, with a low unemployment rate.
Lending activity has remained strong lately, but the prospects are softer over the medium term, especially with the official cash rate and mortgage rates set to rise further.
In the construction industry, new dwelling consents remain at record highs, reflecting smaller dwellings in Auckland. However, capacity pressures are now intense and costs are rising quickly. Eventually, that will curb new-build demand as people focus more on buying existing dwellings.
Overall, there may be a short term ‘bounce’ in activity and prices, as restrictions ease and the whole country moves towards alert level one.
However, the drivers for a medium term slow down are still in place. These include tighter LVR and tax rules, affordability pressures, and rising mortgage rates.