We can all agree that a global pandemic was going to impact economies around the world, and in New Zealand, we all know that the house sale values have increased despite the predictions to the contrary before and during lockdown last year. It is easy to think this is a New Zealand problem, unique to our location, or even our response to the pandemic, however according to a recent CNN Business article this is not the case at all. Read here
Like many Kiwis, homeowners and even experts around the world expected the pandemic to have a negative effect on property values with the market taking a downturn. Instead of a repeat of what happened after the GFC in 2008, which many were expecting, house prices have risen. The 37 wealthy countries that make up the OECD (Organisation for Economic Cooperation and Development), which includes New Zealand, have seen the fastest year-on-year growth in the past two decades – almost 7% between the fourth quarter of 2019 and the fourth quarter of 2020.
It does not seem that anyone expects this to change any time soon, even with restrictions applied by various governments (including our own) to cool housing markets. If there is one thing that is apparent, the pandemic has changed the way people live or want to live, and as borders start to reopen, interest in local markets from nationals living abroad, or even those wanting to emigrate to new countries, will likely increase.
Interest rates for mortgages in New Zealand as well as globally remain low, and the general opinion is they will not be significantly rising any time soon. With the cost of borrowing remaining low, and demand outstripping supply, the pressure continues with buyers having to compete to purchase their next home.
Locally, according to the stats that were released by REINZ last week, and presented in our video Richmond had 25 sales, with a median sale price of $800,000. The average number of days on the market was just 23. Nelson had 75 sales, with a median price of $743,000 and an average number of days on the market was 29.
While we have few comparable stats for April last year, given we were in lockdown, we do know that the market has been strong for successive years in our region. In April 2018 the median sale price in Richmond was $550,000 and in Nelson, it was $545,000. In the past 3 years, the median sale price in Richmond has increased over 45% and in Nelson over 36%.
It may be comforting to realise we are not alone in this, and in reality, those buying and selling in the same market will be impacted minimally, but everyone agrees this provides a challenge for those new to the housing market. We watch with interest how the markets and governments approach this challenge without negatively impacting economic growth and inflationary pressures.