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The value of residential real estate sold in Auckland jumps in 2020 and almost equals the value in the rest of the country, REINZ sales data shows. Tight supply and high demand feature almost everywhere

The value of residential real estate sold in Auckland jumps in 2020 and almost equals the value in the rest of the country, REINZ sales data shows. Tight supply and high demand feature almost everywhere

Press release supplied by REINZ


The annual review of New Zealand’s residential property market in 2020 has shown a 24.7% increase in overall spend from $48.7b for the 11 months ending November 2019 compared $60.8b for the 11 months ending November 2020, according to the latest data from the Real Estate Institute of New Zealand (REINZ), source of the most complete and accurate real estate data in New Zealand.

In Auckland, the increase is even higher, with a 40.8% increase from $20.8b for the 11 months ending November 2020, to $29.2b for the 11 months ending November 2020 – an additional $8.4b.

Bindi Norwell, Chief Executive at REINZ says: “The 2020 property market has performed in a way that we may not have expected just 11 months ago. The results have been influenced by a number of key themes including:

  1. COVID-19 – the impacts of this year’s global pandemic, the various alert levels and lockdowns that New Zealand went into have all impacted this year’s property market, however, not in the way that many people, economists and commentators were initially expecting
  2. No international travel – it has been estimated that approximately $10 billion that would have been spent on international travel this year has instead stayed in the country and been diverted to other areas, such as property
  3. LVRs - The Reserve Bank’s decision in April to remove LVR restrictions for a 12-month period to support the financial stability in the economy – this has been a key factor in invigorating the market, particularly as it approaches re-introduction and buyers hurry to make a purchase before these restrictions are placed again
  4. Low interest rates – encouraging more investors into the market, as better returns will be made than having money sit in the bank
  5. Auckland effect – experiencing an uplift in median prices after three and a half stable years around the $850,000 mark. Median prices started lifting in late 2019, and reached the $1 million mark in October 2020
  6. Increasing unaffordability – New Zealand’s urban housing market is considered ‘severely’ unaffordable according to the Demographia International Housing Affordability survey, as median house prices are more than seven times the median income
  7. Continued strength of the regions - in terms of price growth with increased demand and a lack of supply of properties, putting pressure on prices in some areas, particularly as buyers in the lower price brackets were priced out of the main centres
  8. Record low OCR - and low bank lending rates has meant eased accessibility for more first-time buyers, however, we are still hearing that accessing finance is a barrier for many
  9. First time buyers – have become more active in the market with lending to first home buyers up 26.7% from $1,102 million October 2019 to $1,396 million October 2020 according to the Reserve Bank
  10. FOMO - Increasing sales volumes and decreasing stock levels have created an intensified fear of missing out for some purchasers, encouraging more people into the market, trying to secure a property before prices increase too much or options ‘run out’.

“This year has been an interesting one for the real estate industry – we’ve seen record median prices reached in many parts of the country, with November itself seeing 11 new regional records – the likes of which we haven’t seen since October 2003 when the market was seeing significant increases in house prices,” says Norwell.

“The increasing prices across the country combined with the increasing sales means that when we look at the total value of property sold in the 11 months ending November 2020 compared to the same period in 2019, we see a 24.7% increase, showing that the overall spend across New Zealand in the property market has increased significantly from $48.7b to $60.8b.

“We are expecting 2021 to see ongoing regional growth as workplaces become more flexible, remote work continues and New Zealanders settle into the ‘new normal’. This year has certainly highlighted further that we need a consolidated industry and government response to help address housing unaffordability across New Zealand,” concludes Norwell.

Median Sale Price

  • The National median sale price increased 14.9% for the 11 months ending November 2020 to $675,000 when compared to the 11 months ending November 2019 ($587,500)
  • The median sale price for New Zealand excluding Auckland increased 13.8% for the 11 months ending November 2020 to $565,000 when compared to the 11 months ending November 2019 ($496,500)
  • The Auckland median sale price increased 11.4% for the 11 months ending November 2020 ($941,000) when compared to the 11 months ending November 2019 ($845,000).

Sales Volume

  • The number of residential properties sold across New Zealand for the 11 months ending November 2020 totalled 75,800 which is a 6.2% increase on the same period last year, when 71,405 properties were sold – which is significant, given COVID-19 and the seven week lockdown
  • The number of residential properties sold across New Zealand excluding Auckland for the 11 months ending November 2020 totalled 50,041 which is a -0.9% decrease on the same period last year when 50,475 properties were sold
  • The number of residential properties sold across Auckland region for the 11 months ending November 2020 totalled 25,759 which is a 23.1% increase on the same period last year when 20,930 properties were sold – which is considerable, given the additional two and a half week lockdown that Auckland had in August.

Days to sell

  • The median number of days to sell a residential property across New Zealand decreased 5 days for the 11 months ending November 2020 compared to the 11 months ending November 2019 (from 37 to 35 days)
  • The median number of days to sell a residential property across New Zealand excluding Auckland decreased 4 days for the 11 months ending November 2020 compared to the 11 months ending November 2019 (from 36 to 32 days)
  • The median number of days to sell a residential property across Auckland region decreased 8 days for the 11 months ending November 2020 compared to the 11 months ending November 2019 (from 41 to 33 days).

New Zealand

YTD November Count Sale Price
median)
Sale Price
(Sum)
Days to Sell
(median)
2019 71,405 $587,500 $48.7b 37
2020 75,800 $675,000 $60.8b 32
% movement +6.2% +5.6% +24.7% -13.5%

New Zealand excluding Auckland

YTD November Count Sale Price
(median)
Sale Price
(Sum)
Days to Sell
(median)
2019 50,475 $496,500 $28.0b 36
2020 50,041 $565,000 $31.6b 32
% movement -0.9% +13.8% +12.9% -11.1%

Auckland

YTD November Count Sale Price
(median)
Sale Price
(Sum)
Days to Sell
(median)
2019 20,930 $845,000 $20.8b 43
2020 25,759 $941,000 $29.2b 38
% movement +23.1% +11.4% +40.8% -11.6%

 

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25 Comments

11
up

Pretty much sums it up nicely. When the outlook is looking uncertain, people stash their cash in the good old NZ property market and why wouldn't you going by its historic performance, nothing else comes close.

The future NZ outlook is being ushered into more certainty by calculation mostly for the young graduate doctors, nurses, pharmacist, dentist, teacher, police force etc.
They have to move across the ditch, OZ banks recently being pushed into more prudent regulatory practices, govt guarantee of savings unlike NZ and cheaper groceries. Nothing can beat NZ stellar property market 'wealth' performance that is for sure, but in our years line of work.. we can assure you, that nothing can beat 'Health'.. not even the forever wealth, NZ seems to focus on.

Good list of 10 reasons why things are going mental. I would add one more to the list and put it at number 1.

** fear that regulations are going to be put in place that means I can no longer purchase, when today I can. Rush to beat these regulations.

Am I the only one that sees this as one of the main reasons a lot of investors are jumping in? Btw: By regulations I mean more than just a 30% lvr

Yet still there are investors who, brazenly, remain dissatisfied with the capital appreciation of NZ property.......

There's a rumour (Hamilton based, it appears) that sometime in the next 12 months a well-funded political organisation will launch - called the CGP, or "Capital Gains Party". Apparently, it will campaign/lobby to eliminate all forms of intervention in the housing market - including by central government and the Reserve Bank.

Will be interesting to see how much traction it gets??

Merry Christmas,

TTP

Where do I vote?!
Bring it on.
Any Party that advocates for less Government/RBNZ involvement in a market will get my vote.
That will mean no control over the OCR - and so mortgage rates, of course, and no bailing out any defaulting lender or insurer à la SCF or AMI.
Let the market; all markets, stand on their own two feet and let the chips fall where they may.

Your rumour sounds like humour.

As true elimination of all forms of intervention in the housing market would result in a fall in house prices.

You've lost me.
Why would anyone buy into a market that might become more illiquid in the future?
It's not whether you can buy-in today that matters, but whether you can sell-out tomorrow ie: Will the new regulations mean fewer possible buyers?

Short term you are right, but long term simply being able to purchase now is the important thing ( as long as the rent covers the bills )

Oki Doki.
Personally, I wouldn't buy for any term; short or long, if I thought that I'd have trouble selling when I wanted to - for whatever reason. Just the hassle of having to sell what I'd bought to upgrade/change/downgrade or just plain cash-in would make me think twice today if I thought any of those would be harder in the future for whoever I wanted to sell to.
A future, by the way, none of us know what it holds. Because making any judgment based on fundamentals ( the rent covering the bill etc) has been shown to be folly. It's been 'gut instinct'; past history; financial market manipulation and fear & hope that have driven our property market for a decade or more. Certainly not fundamentals.
The only thing we do know for sure, as you allude to, is that change is inevitable.

22
up

Thank goodness we have a Labour Government to control house prices!! Not like John Key's lot.!!!LOL.

Plus it really started to get bad under both labour governments. Wonder if National will campaign again on solving the housing crisis, and then ignore the crisis exists again if they get back in. Once I am a house owner, maybe my opinion will change, as many house owners don't feel negative that house prices are increasing, resulting in younger people having to get in to higher and higher debt. Won't be too many years before the average mortgage that young FHBs need to take out, is a million dollars. Especially if house prices are now doubling every 7-8years, instead of every 10. Looks like it is going exponential, or something bad will happen that will flatline it.

Young people really only have minor party options such as TOP or the Greens to vote for now. If they want property investors to stand on their own two feet and not be funded via wealth transfers from working/saving folk.

lol

So I hope we can expect Bindi to be constantly hounded by the media to ensure that every dollar extended to any member of the REINZ under the wage subsidy has been repaid in full? There is absolutely no justification for any of them keeping it and to do so would be tantamount to theft.

Bindi resigned last week, maybe it’s just all too much for her !

If only 12 bln more could be spent on education

If the govt had wanted more to education they would have worked on getting a quarantine system up to bring in intl students.

No, he said education, not edu-migration

Exactly, promoting science for instance, not dodgy institutions purely existing just to get a visa .But no, we spend 12bln More on rotten houses.

Leaderless.. that's what we are, a problem so simply solved, albeit with slight short term pain. Grasp the thistle, equity release needs to be taxed as income. So simple for someone with an ounce of vision. But our leaders are children, led by the media who are in the pay of the banks a deadly mix.

"Taxed as income"
Will that apply to all loan top-ups ... what if a homeowner wants to buy a business or a pensioner is using a reverse mortgage. A few days ago one commenter stated they increased their mortgage to buy a car

Wow 20billion gone from tourism import? 12billion up into RE economy, tight supply, high demand (ease approval, when LVR gone). This is a clear good momentum to keep;
RBNZ: increase QE more into climate change buffer, negative OCR, LVR & DTI must be off, FLP into housing.
Govt: Lower taxes, extend/increase wage subsidy scheme, NO to rent freeze and ensure to remove bright line.
If NZ can maintain to outshine Canada, UK, OZ & USA for housing cost increasing rate, the more capital shall get into NZ to seek stellar growth of such investment category. NZ will be benefitted for sure.

I certainly wouldn't have called the incredible surge in property prices because I just didn't think RBNZ would act with that level of...impunity about social outcomes. As you can see from the LVR debacle however they themselves don't really have a grasp on the effects of monetary policies they are implementing.

In fairness to RBNZ however I think everyone looked at this and thought the fiscal response would include measures aimed at supporting New Zealands economy over the long term (e.g. infrastructure development, house building etc.) but our response has been absolutely anaemic.

The article lists 10 excuses, but no real reasons for house price increases.

The reason is policies that limit the availability of residential land by way of zoning restrictions and council consenting delays.

As an analogy:
Housing is the fuel.
Restricting supply is the ignition that causes prices to rise beyond their value-added costs.
Everything else, like interest rates, immigration, more disposable income are accelerants.

Accelerants have no effect on the fuel if the fuel has not first been ignited.

Approx 1/3 to 1/2 of the $12 billion extra spend is non-value-added costs, ie costs that are only due to artificial policy constraints and that if were not there, would not change the amenity value of the property.

If you are the person that has paid this extra cost, you would call it waste (and a life long debt), if you are the person who has received this extra 'money for nothing', you would call it revenue.

A better heading would have been, '$6 billion of extra debt for no extra amenity value taken on by purchasers all because of Govt. housing policy.'

When the first lock down started, we all in Healthcare sectors holding up breath, bracing for impact. But instead, even up until now while the whole world still raging with this bug mutation. NZ boasted to break to Covid backbone (figuratively)/surpassing the initial agenda to buy time/flatten the curve etc, albeit non-directly related.. imagine if those billions of spending/increases of big corporation subsidies, beefing up the QEs.. magically translated into preparation, full battle readiness within the health sectors nationwide. More $ into staffing, lab capacity, more medication, ICU beds, PPE, training, front line preparations, rehearse, improve procedures, 24hrs smooth cycle, work/care flow etc. - Nothing really significance happening on those fronts, the 'health response' is a myth being dispelled by actually the 'economic response'.. whilst all along relying on the one action alone 'border shutdown' - NZ, you'll deserve what's coming next.. ouh forgot, the PM did those multiple frowning of interest expression, and being heard uttering that word.. vaccine. Do go on