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RAY WHITE NOW-REAL-TIME RESIDENTIAL MARKET INSIGHTS MAY edition

By Steve Brennan

Dear Property Owner,

Our 42nd edition of Ray White Now welcomes the second quarter of 2021, with trading in April continuing the momentum of the first quarter of 2021.

The month of April was the first month where the Government housing restrictions came into place to firstly try and place mechanisms that will see investors review their level of activity in the current real estate market, and secondly, and more positively, the Government provided further incentives to first home buyers occupying their properties to be able to assist in purchasing. While the balance of the market remains particularly active, the Reserve Bank together with the Government are monitoring house price increases across New Zealand.

When we look at April 2020, it was a time when we were largely in Level 4 lockdown. So there is little comparison to the same time last year at a time when the real estate industry was unable to physically view properties and was coming to grips with the online platforms available for marketing and selling. There was a continuing thirst from buyers to purchase during lockdown. While commentators were expressing the demise of the housing market, the remote options, while not in a public forum, were telling a different story. As Level 3 approached at the end of April 2020 the market moved forward with private inspections that allowed sales to be completed. This saw the market start to rise quickly in regards to price and also the number of sales.

In April 2021, one year on from the Level 4 lockdown conditions, sales increased from $404 million this time last year to $1.681 billion which was a fourfold increase. Released sales increased to 1,626 and while it was a big jump on 2020 it was also an increase of 39 per cent on April 2019 which is a more relative time.

April 2021 Ray White sales in comparison to April 2020 Ray White sales

The effect of the increase in the
number of sales saw us oversell our
portfolio of listings. While the listing
numbers were up, the total number of
properties listed was 1,467. This did
not cover the total number of sales,
which saw us oversell our portfolio by
159 sales in total. This reduced our overall listings on the market to 3,388 as of 1 May which is 16.12 per cent down on the same time last year and 26.97 per cent down on 2019. So what we see is supply remaining positive against previous years’ as it is the demand that continues to put pressure on the overall choice that buyers have available in the market.

This week saw SBS Bank offering a one year fixed mortgage rate of 2.19 per cent which was a reduction of 10 bps. Amongst the mainstream banks there has also been an adjustment in regards to lending, with home loan rate changes now in place to reflect a steeper rate curve. The average one-year loan for those with a 20 per cent deposit is 2.25 per cent with many of the mainstream banks now reducing their two-year fixed home loan to 2.55 per cent while increasing their four and five year terms to 3.09 per cent and 3.39 per cent respectively.

There continues to be so many conflicting reports and this is one of the reasons why we believe our real-time data and assessing what is happening now is important to the decision-making of those who are considering real estate in today’s environment. What we do know is that interest rates remain at record lows for the foreseeable future. While we do not discount any change either up or down, it is important to realise what today’s borrowing capacity is for the individual homebuyer.

Supply and demand are still a major part of the price stability and our auctions continue to have a strong depth of buyer registration and buyer bidding activity. The number of auctions continue to sit at a high level in comparison to this time last year. Buyer confidence bidding at auction continues to see over 70 per cent of all properties sold under the hammer and a further percentage sold within the auction negotiation time.

There are various markets which continue to show record median prices. As we are in the more seasonally active real estate market, we expect that price increases will be underpinned by the depth of the buyer pool. Investors will now consider the proposed Government housing policy and this will bring stability to the lending aspect of every transaction.

Ray White Now is produced in conjunction with real-time data from our 184 offices across New Zealand. Ray White, on an annual basis, completes $20.38 billion worth of property transactions and currently manages a portfolio of 19,713 properties through our property management division.

Regards

Carey Smith
Ray White New Zealand Chief Executive

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