Despite everything that has taken place this year, house prices have been largely unaffected by the aftermath of COVID.
In fact, the whole event seems to have induced more demand for home ownership. And that effect is not just specific to Auckland, house prices and demand have seen an increase across the nation but as always, Auckland still leads the way.
The median house price across the country rose by $95,000 to $675,000 in August, a 16.4% increase. Bindi Norwell, the Chief Executive of REINZ stated that 8 regions and 17 districts across the country achieved record median prices 6 months after the first lockdown.
The number of houses sold in August was at a 5 year high for the month, a theme that was consistent across the nation.
Auckland’s median house price rose by 16% to $950,000, that figure is a record high and it shows an increase of more than $100,000 compared to the same time last year.
Norwell went on to say that the mixture of several elements has led to the current situation in the market. These factors included the low interest rates, shortage of property listings and people’s aspiration to move onto or up the property ladder. Norwell then went on to point out that the lack of listings is a serious issue and one that could drive up the price even further as the year goes on. The total number of properties for sale across the country decreased by 13.2% and the resulting figure of 17,974 was the lowest on record.
The sheer demand for houses was reflected in the amount of time a property spent on the market with the national figure decreasing from 39 to 34 days. On the other hand, the average Auckland property spent around 35 days on the market, 9 less than the same time last year.
Norwell encouraged people to take their precautions and carry out their due diligence before buying a property despite the seemingly rushed nature of the market.
Renowned economist Tony Alexander releases a monthly property survey based on the thoughts of real estate agents all around the country.
In the latest update, Alexander cited that more people are attending open homes and auctions. The flow on effect of this is that home buyers are now less confident of a drastic fall in the house prices. Agents across the country have noticed a continued rise in property prices while listings are few and heavily in demand.
Across the nation, 36% of agents noted an increase in the number of people attending auctions while that figure was 47% in Auckland. With the restrictions of the current COVID alert level, online attendance of auctions has become more popular.
One of the main reasons behind the rising property market is the ‘fear of missing out’ or FOMO as Alexander calls it. With constantly increasing house prices, buyers may feel that waiting a little longer to purchase a property will see them locked out of the market. That fear has only been escalated by the fact that prices did not fall post COVID when many people expected them to do so.
The surveyed real estate agents also noted that first home buyers are re-entering the market because of the favourable conditions like low interest rates and boosted savings due to lack of travelling.
Investor numbers have not changed by much and they still make up a sizable proportion of home buyers with low interest rates acting in everyone’s favour. However, investors are less sure about grabbing a bargain on the market and are more in tune with the reality of the pricey housing market.
Home buyers were initially worried about a crash in property prices but after the strong performance of the market, their worries have now shifted towards the lack of listings available and the constant increase in property prices.