Who could possibly have predicted that six months on from the start of our March lockdown, property prices would be breaking records?
Average asking prices in July were 9% higher than in July 2019, the biggest year-on-year jump in three years, according to TradeMe property. That was supported by a year-on-year rise of 14.8% in the median house price, now up to $660,000, as pent-up demand and low interest rates brought out everyone from first-home buyers to experienced investors, says REINZ. Even the Queenstown-Lakes district saw a post-lockdown rise in its median price.
Rents have not been as buoyant, according to TradeMe property data, with Queenstown-Lakes showing a “staggering” drop of 28% year-on-year, “the largest annual percentrage drop we’ve seen in the district since we started recording rental data.” In Auckland it’s been less exciting – rents are essentially flat with central city being down at least 10-20% depending on the property.
Even with Queenstown rents taking a tumble, this is an astonishing position to find the property market in when you think about the forecasts from April and May; an ANZ report predicted a 10% to 15% drop or more.
The banks are still being cautious, saying a downturn is still likely in late 2020 and into early 2021, particularly after the latest lockdown. How this will pan out remains uncertain, but if our economy manages to avoid the worst ravages of the virus, it’s possible our housing market will remain an attractive investment.