With the easing of Covid restrictions, the property market appears to have bounced back to life, according to Golden Bay realtors.
Sharon McConnon of Golden Bay First National says there is “lots of activity at the moment” which she puts down to the recent relaxation of the rules. “Whilst there was a restricted amount of activity in Level 3, it really wasn’t until Level 2 that we could properly resume our day-to-day activities to a greater degree.”
The upswing in activity is welcome after the market froze, rather than merely cooled, when the country was at Alert Level 4. According to the Real Estate Institute of New Zealand (REINZ), the number of properties sold in April (compared with the same time last year) across New Zealand decreased by 78.5% – from 6,082 to 1,305.
Billy Kerrisk of Ray White Golden Bay has already sold two properties, and secured a further three under contract, since lockdown. She is understandably feeling positive about buyer interest. “Demand is probably stronger now than it was before lockdown – and it was already building then.”
But, while demand is strong, supply is weak, says Billy. “The problem is getting property to sell; that started at the beginning of the year. Some people are hesitating, but no one should hesitate if they really want to sell.”
Sharon paints a similar picture. “Stock is down across the region but buyer demand is high. Multiple offers were common prior to lockdown and continue now. There has been a huge amount of buyer enquiry over the last couple of weeks, so we would encourage anyone who was considering listing their property for sale and is still wanting to do so, to carry on with those plans whilst the buyers are active.”
Sotheby’s International Realty sales associate Kylie Jones has seen both parties keen to do business in the Bay. “The lockdown seems to have increased motivation among sellers and buyers. New listings have come to market with good enquiry.”
According to Sharon, many of those looking to purchase are planning to live in the Bay. “We’ve had a nice mix of buyers, and whether they be first-home buyers, out-of-towners or otherwise, it’s worth noting that the vast majority will be settling here and calling Golden Bay home.”
Kylie says her clients are from all over the country and the world. “Enquiries seem to be coming from people around the country who are seeking to retire or make a lifestyle-inspired decision. The level of inquiry from overseas people has significantly increased…Ex-pat Kiwis and Australians are also showing keen interest. Some of these people appear to have changed from a long-term plan to greater immediacy through the lockdown phase.”
The type of property people are looking for varies as much as the buyers themselves, says Kylie. “[It includes] lifestyle sized blocks with sufficient useable land, views, privacy. When it comes to houses, the most common brief is that it be low maintenance, warm and energy efficient or eco-friendly.”
Billy has taken a similar range of requests. “I’ve had inquiries for farms, lifestyle blocks, holiday homes, town houses and sections.”
Outlook
For the past couple of decades, property has been go-to investment choice for Mr and Mrs Kiwi, and it has provided them with very good returns – especially when rental yield is added to untaxed capital gain.
Those substantial capital gains have seen New Zealand residential property prices become some of the highest in the world relative to affordability. That’s not surprising considering that, in the Tasman region, for example, the median house price has increased by 73% since 2010 – from $380,000 to $656,565 – while during the same period, median earnings have risen by only 34 per cent.
This imbalance may change, according to the Reserve Bank of New Zealand’s latest Financial Stability Report which warns that the housing market is vulnerable to a downturn in the aftermath of the pandemic. “After nearly two decades of house price growth generally exceeding the growth rate of incomes, the current economic downturn could bring a significant correction.”
On the plus side, mortgage interest rates are currently at an all-time low, with some banks offering 2.6 per cent and, coupled with the removal of loan-to-value ratio (LVR) restrictions for home loans, this makes borrowing money to invest in property still an attractive prospect.
Irrespective of what happens elsewhere in New Zealand, Bay property is well placed to resist downward pressure on prices, says Kylie. “The superb lifestyle and geographic appeal of Golden Bay should see properties hold their value even though most forecasters are predicting a fall.” And she is optimistic about medium-term market activity. “Given the level of inquiry it should buoy activity rates and transactions through the winter months.”
Some believe the coronavirus crisis could actually boost the local market by bringing an influx of buyers seeking safety, a beautiful environment and who have realised that working from home is a viable option. “Demand is growing,” says Billy. “While in their bubble, people have had time to think about things they wished they’d done; so, if they have always wanted to move to Golden Bay, why not do it now?”
Kylie detects a similar sentiment. “Most of the people I speak with have had time to take stock of their current situation and perhaps re-assess their priorities and future plans, many are deciding to take action sooner rather than later.”
Article: Jo Richards.
