The streak of record-breaking months in the New Zealand property market has continued in April 2021. While house prices and sales volumes saw an all-time high for the month of April, inventory levels for an April month were at their lowest ever.
So, what’s next for the housing market? Read on for our latest property update.
Kiwis starting to “wait and see”
According to the latest REINZ data, the median prices for residential property across New Zealand rose by over 19 per cent to $810,000 in April 2021, from $680,000 in April 2020. The month also saw the highest number of houses sold in an April month in five years, with 7,218 properties sold. For New Zealand excluding Auckland, it was the busiest April in three years, and for Auckland, the busiest April in five years.
Wendy Alexander, acting chief executive at REINZ, said that while these may be the figures for April, the “reality is that we’ve seen the number of sales decrease when compared to March. While in part this is what we expect to happen when moving from March to April, there is definitely a wait and see approach from a number of investors and also some first-time buyers.”
Median prices for New Zealand excluding Auckland increased by 33.5 per cent from $517,000 in April 2020 to $690,000 in April 2021.
Nine regions recorded their highest median prices for the month of April:
- Auckland: +21.6 per cent ($925,000 in April 2020, to $1,125,000)
- Waikato: +37.7 per cent ($530,000 in April 2020, to $730,000)
- Gisborne: +72.5 per cent ($400,000 in April 2020, to $690,000)
- Hawke’s Bay: +17.6 per cent ($655,000 in April 2020, to $770,550)
- Manawatu/Wanganui: +46.8 per cent ($395,000 in April 2020, to $580,000)
- Taranaki: +42.1 per cent ($380,000 April 2020, to $540,000)
- Nelson: +15.1 per cent ($645,000 in April 2020, to $743,000)
- Marlborough: +46.1 per cent ($460,000 in April 2020, to $672,000)
- Otago: +58.8 per cent ($447,000 in April 2020, to $710,000)
Lack of supply continues to push up prices
In April 2021, the total number of properties available for sale in the country decreased by 19.6 per cent from April 2020, dropping from 19,702 to 15,838 – the lowest for an April month ever.
Wendy Alexander said that the fall in sales volumes, when compared to March 2021, were likely to be the early effects of LVR restrictions that may be starting to slow down the market.
However, another likely cause is the lack of supply. “As we predicted last month, the ongoing lack of supply continues to put upwards pressure on house prices,” Wendy Alexander said. “However, we have seen some regions start to show signs of prices easing and the rate of growth slowing down a little which will be welcome news to those looking to get on the property market. Additionally, it might be the first signs that the re-introduction of the LVRs is starting to have the desired effect.”
Where to next?
According to independent economist Tony Alexander, “the underlying trend in the housing market is one of some easing off of activity and intensity in searching and pricing. This trend got interrupted over February into April as investors acted quickly to lock up a purchase before they needed a 40% deposit from May 1. Now, when we get data out for the next few months, we are likely to see that trend get re-established with some accentuation from the recent announcements.”
He added that, while the Reserve Bank may start raising interest rates in 2022, higher rates of the past aren’t likely. “In all probability, by the time mortgage rates start rising, the housing market will have substantially calmed down under pressure from government actions, people diverting spending back to foreign travel, increased supply (particularly in Auckland), and a net loss of Kiwis to Australia to reap the benefits of their boom in labour demand.”
Planning a property move in 2021?
If you’re looking to get into the property market in 2021, or would like to make the most of low mortgage rates to pay off your home loan faster, please don’t hesitate to contact us. As always, we are keeping a close eye on mortgage rate trends and forecasts, to ensure that we provide you with the most up-to-date advice and guidance.
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