FOMO stokes market
Auckland is amid some of the strongest market conditions ever experienced. Our virtual auction rooms, a hive of online activity with determined buyers vying to secure property. Harcourts Cooper & Co had over 3,200 people tune in to watch our auctions over the past 7 days.
North Shore sales volumes plummeted 67% in September due to the level 4 lockdown. Moving into level 3 combined with the usual Spring lift has assisted in a dramatic rebound in October to 416 sales – above the long-term average volumes as depicted below. The ability to conduct business remotely and eased restrictions around viewings have enabled real estate continuity, while a general FOMO — fear of missing out – stokes a market that remains strong.
This FOMO, supply, demand & relatively low interest rates continue to fuel price increases with the North Shore median up 28% when compared to prior year. We are yet to see any impact of Government measures to slow price increases.
As we head into the heat of Summer there are no signs of the market cooling. Growing confidence of vendors and buyers to make property decisions is evident.
Market Update | August 2021
We went into lockdown with rising prices and sales volumes were circa average when looking at the longer term trends. The recent data released from The Real Estate Institute of New Zealand (REINZ) for August showed a median North Shore sales price of $1,295.000. This is an increase of 16% when compared to the same period last year.
New Zealand achieved another record median sale price of $850,000.
Given New Zealand was in level 4 lockdown from the 18th of August it is certainly of no surprise that the sales volumes were impacted. The 331 sales achieved on the North Shore in August was approximately 23% down when compared to the same period last year. Median days to sell however do remain low at 34.
Our online auctions at Harcourts Cooper & Co continue to be exceptionally strong during the current lockdown we completed 33 online auctions with 32 of those selling under the virtual hammer. Our auction team in August conducted 79 auctions with an overall success rate of 92%.
Aucklander’s are hopeful that next week we will see a move to level 3. Confidence is high that the market will remain strong as we enter into this usual busy spring selling season.
The current lockdown is likely to have propelled that energy, the built up demand from buyers wanting to purchase, vendors wanting to sell, people needing to move, add to that the fuel of low interest rates, low unemployment and furthermore the confidence in the markets reaction following a lockdown that was evidenced last year, all indicating a very strong finish to the 2021 property market.
The impact of lockdown on the housing market.
Speculations are rife as to what impact the current lockdown will have on the property market. If history is anything to go by, we would see activity plummet during a level 4 lockdown as it did in 2020 and then increase rapidly in the months following. Last year we saw the lowest volumes on record during lockdown, followed later in year by some of the highest volumes as depicted on the North Shore sales volumes graph below.
But will that replicate in 2021? We have entered both level 4 lockdowns with rising prices and sales volumes close to average on a long-term basis. Entering the current lockdown, we have seen increased confidence from buyers – activity to date has remained high with high numbers of determined bidders active at our online auctions. At the time of writing Harcourts Cooper & Co had sold 100% of their online auctions during the current lockdown (25/25). Stock available is at extreme low levels with less than 900 listings currently available on the North Shore.
A notable difference between the 2020 and 2021 lockdowns in the interest rate & lending environments.In March 2020, the Reserve bank cut interest rates by 0.75 percentage points and removed the LVR restrictions.Yet in 2021 they have advised that rates are set to rise and LVR restrictions tighter than before for investors.
As we head towards the usual busy Spring selling season it is likely that the current lockdown will in fact propel the market – with built demand during the current restricted conditions and the fuel of low interest rates, low stock numbers, low unemployment and confidence in the markets response following a lockdown.