‘Reality check’ for real estate
Auckland real estate agency Barfoot & Thompson says sales numbers returned to normal in June while prices held stable – but research firm Corelogic is warning there may be a ‘‘reality check’’ coming.
Barfoot & Thompson reported 820 sales by its agents in June, 4.3 per cent more than the same time a year earlier. The agency’s average sale price was $943,417, 1.4 per cent up year-on-year.
‘‘Taken in isolation, the month’s trading was very much ‘business as usual’,’’ said managing director Peter Thompson.
‘‘What contributed to the robustness of the market in June was solid new listings at 1582, 56.3 per cent higher than in the same month last year; an influx of firsttime buyers; and undoubtedly some catch-up business from the slow sales in May. It is far too early to see this result as an indicator that the property market will defy forecasts and ride out the Covid-19 pandemic unaffected.
‘‘It does suggest that over a three to five-year time horizon buyers have confidence in property at today’s prevailing prices and that they are not holding back in the hope of a major decline in values.’’
He said the 4001 properties on the agency’s books was the highest number in 12 months.
But Kelvin Davidson, an economist at Corelogic, said a survey of users of its Property Guru platform, largely real estate agents, was a reality check on some of the positive stories emerging about the property market.
‘‘To be clear, we don’t think that the outlook is all doom and gloom. But at the same time, we’ve had the sense in the past few weeks that the effects on property from the recession and rising unemployment might have perhaps been temporarily overlooked.’’
He said a lot of activity had picked up significantly since the country moved to alert level 3.
‘‘But while we’ve been wary of being unduly pessimistic about the economic and property market outlook, there’s a sense that some have now become too optimistic – after all, we’re in a recession and unemployment has further to rise yet. These factors will restrain the property market for the rest of 2020 at least.’’
Davidson said the survey showed 63 per cent expected a fall in prices.
‘‘All in all, it’s important to note that our survey was taken at one point in time – mid-June – and mostly covered one audience – real estate agents. However, the results are still a reality check and reaffirm our view that the property market isn’t out of the woods yet. Spring remains a key period to watch, as wage subsidies and mortgage payment deferrals potentially wind down, and the general election in September possibly creates some extra uncertainty in the economy.’’