Quotable Value is warning that the fallout from the Covid-19 lockdown could have an adverse impact on the residential property market until the end of the year.
QV's latest report, based on sales data for the three months to the end of March, showed that the market was in reasonably good shape up until the commencement of the lockdown, with average residential property values around the country rising 2.6% in the first quarter of this year (see the table below for the average value movements in all districts).
"The housing market was ticking along nicely leading up to lockdown, although in the final week we could see the impacts of uncertainty starting to have an effect," QV General Manager David Nagel said.
"Nobody knows what post-lockdown market conditions will look like," he said.
"We've never been through anything remotely like this.
"Up to this point we were seeing multiple buyers, often with plentiful funds available, competing for tightly held stock.
"Going forward, supply of houses for sale will likely be reduced.
"The pipeline for new builds has been impacted as has almost every other industry during lockdown.
"Most New Zealanders will look to consolidate their position in their current home as the country works its way out of a forecast recession.
"Selling an existing property and upgrading to a different home will likely be furthest from their mind, although some may be forced to downsize or even relocate to another city in order to gain employment.
"But banks will be patient, particularly in the short term with a multitude of other, softer options available like mortgage holidays, to avoid a flood of forced sales.
"Demand for buying a house will also likely be down significantly," he said.
"First home buyers that were active prior to lockdown may have lost some of their buying power with both their investment savings and Kiwisaver accounts taking a hit.
"Their house deposit and employment status may look quite different after lockdown ends, delaying their entry into the market."
However, the difficulties faced by some buyers and vendors could be seen as opportunities by others.
"Others that have fared better under lockdown may see this an an opportunity, while interest rates are low, to dominate what's left of the market," Nagel said.
"With many first home buyers no longer competing, plus a likely post-lockdown slashing of net migration numbers no longer feeding housing demand, we could see a buyers' market develop," he warned.
That could lead to falling sales numbers and falling values.
"What's most likely is we will see transaction volumes drop significantly from pre-lockdown levels," Nagel said.
"House listings will dry up with only those having to sell, for work or financial reasons, wanting to enter an uncertain market.
"Buyers that have the means will likely dominate the market, but with limited stock available, buyers will probably exercise patience and this could force prices down for vendors that simply have to sell.
"But by how much? Nobody knows," he said.
That could create a difficult market until the end of the year.
"With limited transactions after the lockdown ends, we can expect a market filled with uncertainty at least through to the end of 2020 as the economy finds its feet again," Nagel said.
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|QV House Price Index|
|Territorial authority||Average current value $||12 month change %||3 month change %|
|Main Urban Areas||833,489||5.1%||2.3%|
|Rodney - Hibiscus Coast||953,886||2.7%||3.6%|
|Rodney - North||996,225||1.9%||3.0%|
|Auckland - North Shore||1,232,887||2.9%||2.6%|
|North Shore - Coastal||1,404,945||3.1%||2.0%|
|North Shore - Onewa||993,498||3.1%||2.5%|
|North Shore - North Harbour||1,206,241||2.2%||4.8%|
|Auckland - Waitakere||840,323||3.2%||2.4%|
|Auckland - City||1,257,118||2.1%||1.0%|
|Auckland City - Central||1,097,652||1.0%||0.8%|
|Auckland_City - East||1,573,032||2.0%||0.5%|
|Auckland City - South||1,128,745||3.2%||1.6%|
|Auckland City - Islands||1,157,851||3.0%||0.6%|
|Auckland - Manukau||922,785||3.4%||2.3%|
|Manukau - East||1,182,766||4.1%||2.6%|
|Manukau - Central||713,105||2.5%||1.9%|
|Manukau - North West||804,717||3.6%||2.5%|
|Auckland - Papakura||715,365||3.5%||-0.1%|
|Auckland - Franklin||687,164||2.3%||1.5%|
|Hamilton - North East||773,282||7.1%||3.3%|
|Hamilton - Central & North West||583,308||9.0%||4.2%|
|Hamilton - South East||577,963||7.9%||3.2%|
|Hamilton - South West||550,459||6.0%||2.2%|
|Central Hawkes Bay||402,744||6.2%||3.1%|
|Wellington - Central & South||882,653||7.3%||3.0%|
|Wellington - East||953,072||7.0%||5.0%|
|Wellington - North||817,906||7.9%||4.9%|
|Wellington - West||1,012,563||8.0%||3.5%|
|Christchurch - East||391,722||4.4%||1.7%|
|Christchurch - Hills||703,864||3.4%||1.4%|
|Christchurch - Central & North||599,697||2.2%||0.5%|
|Christchurch - Southwest||489,427||3.7%||2.0%|
|Christchurch - Banks Peninsula||549,573||5.6%||0.3%|
|Dunedin - Central & North||548,817||17.6%||2.9%|
|Dunedin - Peninsular & Coastal||491,270||19.2%||2.3%|
|Dunedin - South||523,424||21.1%||7.0%|
|Dunedin - Taieri||560,581||19.8%||5.6%|