Buyer demand behind buoyant NZ property prices
Strong demand from buyers is keeping NZ property prices resilient in the wake of the lockdown.23 July 2020
Strong demand from buyers is keeping property prices resilient in the wake of the lockdown, according to the latest Trade Me Property Price Index.
Trade Me Property spokesperson Aaron Clancy said it was encouraging to see more Kiwis checking out properties for sale with listing views nationwide up 21% on last year. “We’re seeing much stronger demand for properties than we would’ve anticipated just after the lockdown and it seems, as life has started to get back to normal for many Kiwis, some have decided to continue with their plans to purchase a property.
“Time will tell if this is sustainable or a short lived sugar rush from pent up demand during lockdown.
“In June, we saw higher demand for property listings than we saw in June 2018 or 2019. This demand was up right across the country, with the biggest spikes seen in two central North Island regions – Manawatu/Whanganui (up 39%) and Hawke’s Bay (up 45%).”
“Comparatively, the number of properties available for sale in June was down by 8% when compared with the same month in 2019.”
Mr Clancy said increased demand was putting pressure on prices with the national average asking price rising 8% on the year prior to $699,350 in June. “Every region in the country saw an annual increase in average asking price in June, with some regions reaching all-time highs.
“The provinces in particular had a strong June and we saw record-breaking average asking prices in Manawatu/Whanganui, Gisborne, Nelson/Tasman, Southland and Waikato.”
|Region||Property Price Index|
|Bay of Plenty||Bay of Plenty||$697,600||$697,600|
|Hawke's Bay||Hawke's Bay||$593,300||$593,300|
|West Coast||West Coast||$292,200||$292,200|
Demand from younger buyers up 52%
Mr Clancy said demand from younger buyers aged 18-29 continued to surge in June, after the trend first emerged in April.
“We first saw demand spike in this group following the Reserve Bank’s announcement it was scrapping the 20% home deposit requirement earlier this year and now we’re seeing a growing number of younger Kiwis browse for their first home. This, coupled with record low interest rates, means we’re seeing no signs of this trend slowing, with searches by 18-29 year olds up 52% in June when compared to the same month last year.”
Auckland house prices see year-on-year growth
Mr Clancy said Trade Me’s June data showed Auckland property prices are growing at a slightly slower rate than national prices. “The average asking price in the Auckland region was $934,850 in June, up 5.3% year-on-year. This marks a small drop from May – when the average asking price was $957,350– but is a continuation of the strong price growth trend the region has seen over the past five years.
“In Auckland city, the average asking price was $1,078,400 in June, a 5.5% increase when compared to the same month last year.
“Following the national trend, demand in the Auckland region was on the rise with listing views up 19% year-on-year. Last month, the total number of properties available for sale in the Auckland region was down 13% when compared to June last year, but up 10% when compared to May 2020.”
Property market demand in Wellington sees unprecedented growth
Mr Clancy said interest for property in the Wellington region is still at unprecedented levels, with the number of views on properties for sale up 24% when compared to June 2019.
“The Wellington property market is running particularly hot at the moment, anecdotally we’re hearing that open homes are busy and buyers are having to get in quick to secure the property they want.”
Along with Auckland, property prices in the capital continued to rise year-on-year as a result of strong buyer demand. “The average asking price in the Wellington region in June reached $697,600, an 8.5% increase when compared to June last year.”
“In Wellington city, the average asking price was $814,850, a 7% increase when compared to June 2019.”
Property prices increased in all districts within the Wellington region in June, with the exclusion of South Wairarapa. “Carterton, Kapiti Coast, Lower Hutt, and Masterton all saw double-digit growth in their average asking price year-on-year.
|District||Average Asking Price (June 2020)||Year-On-Year Change|
|Wellington Central||Wellington Central||$814,850||$814,850||Up 7.2%||Up 7.2%|
|Lower Hutt||Lower Hutt||$664,500||$664,500||Up 13.2%||Up 13.2%|
|Upper Hutt||Upper Hutt||$642,200||$642,200||Up 4.6%||Up 4.6%|
|Porirua||Porirua||$731,950||$731,950||Up 6.6%||Up 6.6%|
|Kapiti Coast||Kapiti Coast||$680,200||$680,200||Up 13.8%||Up 13.8%|
|Masterton||Masterton||$477,200||$477,200||Up 19.7%||Up 19.7%|
|Carterton||Carterton||$542,600||$542,600||Up 17.9%||Up 17.9%|
|South Wairarapa||South Wairarapa||$564,300||$564,300||Down 1.6%||Down 1.6%|
Spotlight on Otago
Mr Clancy said Otago had a standout month in June. “There are predictions that the property market in Queenstown-Lakes and Wanaka could be some of the hardest hit by COVID-19 as a result of the slowing tourism industry. However, last month we actually saw demand for property listings increase across the region.
“Overall, demand in Otago followed the national trend in June with the number of views on properties for sale in the region up by 36% when compared with June 2019.”
Mr Clancy said taking a closer look at the districts in the region, Wanaka also saw an increase in Kiwis looking at property. “Demand for properties in Wanaka rose a solid 51% when compared June last year and it was a similar story in Queenstown-Lakes district with a 58%B jump in demand.”
Mr Clancy said the average asking price, on the other hand, differed between districts.
“In Wanaka, the average asking price increased by 11% year-on-year to $1,161,000 while in the Queenstown-Lakes district the average asking price decreased for the second month in a row in June, falling by 5% when compared to the same month last year.
“The average asking price in the Otago region was $661,350 in June – 14% higher than the same month last year and 48% higher than June 2015.”
All house types see annual price increase
Mr Clancy said across New Zealand, the average asking price for all house types experienced a year-on-year increase in June. “The average asking price of a large (5+ bedroom) house in the Wellington region increased by 15% to $1,067,850 when compared to the same month last year. Medium (3-4 bedroom) houses in the region increased by 8% to $725,550, and small (1-2 bedroom) houses increased by 18% to $563,300.
“In Auckland, the average asking price for small houses was up 10% to $728,900, while medium houses were up 7% to $959,150. The average asking price for large houses was up by 15% to $1,067,850.”
Mr Clancy said the national average asking price for urban properties (apartments, townhouses and units) reached a record high of $613.350 in June, up by 8% when compared to 2019. “Units across all regions reached a new high, up 9% year-on-year to $491,100. Apartments and townhouses both saw an annual price increase of 10% and 7% respectively.”
About the Trade Me Property Price Index:
- The Trade Me Property Price Index measures trends in the expectations of selling prices for residential property listings added to Trade Me Property by real estate agents and private sellers over the past three months.
- It provides buyers, sellers and realtors with insights into ‘for sale’ price trends by property type and property size.
- The Index is produced from data on properties listed on Trade Me Property in the three months leading up to the last day of each period. Each period’s value is a truncated mean of the complete three months’ worth of listings. This is to better reflect trends in property prices rather than month-to-month fluctuations in housing stock.
- The Index uses an “80% truncated mean” of the expected sale price to calculate the average asking price. This excludes the upper and lower 10% of listings by price, and averages the expected sale prices of the remaining properties.
- It provides an insight into ‘for sale’ price trends by type and size of property. Other reports aggregate property price data across these various properties.