Uncertain times ahead

Real estate executives on how the housing market will perform post-Covid lockdown

“Any crisis we’ve been through has had an immediate impact on price — a five to 10 per cent drop — but then we’ve recovered within 12 months.”

Peter Thompson, Barfoot & Thompson managing director

2020 started well for Auckland, but the upturn in the market has been stopped in its tracks, with a drastic fall in sales and a modest reduction in prices.

Barfoot & Thompson’s April sale figures were down 17 per cent on April last year, but many of these sales were agreed in March and completed in April, and therefore do not give a complete picture of the state of the market. May will have a major impact for the industry.

The drop in new listings for April to less than a quarter of the number usually expected for the period is a sign of market stability as a flood of new properties brought to market would indicate people were selling under pressure.

Vendors appear to be taking a wait-and-see approach, which is the same trend that occurred in past economic downturns. Many people will be waiting until Alert Level 2 before they put their house on the market or go looking. There will be a lot more confidence at Level 2.

There’s still a lot of property out there, construction is still there and people want to have a roof over their heads.

Property is still a safe investment. Any crisis we’ve been through has had an immediate impact on price — a five to 10 per cent drop — but then we’ve recovered within 12 months.

Bryan Thomson, Harcourts NZ managing director

There has been much house market speculation in recent weeks but let’s focus on what we actually know:

1. During the lockdown buyer interest was significant, which is not surprising given that the market was positive pre-lockdown and many Kiwis had time on their hands to research properties online. 2. Mortgage interest rates remain at historically low levels, so for those looking to buy, this is attractive. 3. There is a well-recognised shortage of residential property in key markets, leading to competition between buyers and tenants for available property. 4. Businesses are significantly challenged due to Covid-19. Some sectors and locations are more impacted than others, however, every location and industry has been or is being impacted.

When you take the above factors into account, there will clearly be some impact on the property market. The question is, to what extent? Will some areas face more price challenges than others? The likely answer is yes. Will some areas move through only impacted slightly in comparison? Again, the likely answer is yes. Will some be forced to sell to reconfigure their financial position? Potentially, yes. Will others make purchasing decisions irrespective of the market? The answer is yes.

What we do know for a fact is people do not buy property on a whim. They buy or sell because of their needs and the needs of their family. A bigger home, a smaller home, schooling needs, lifestyle desires, and, yes, sometimes due to financial challenges.

Carey Smith, Ray White NZ chief executive

There have been early signs of market activity within the current Level 3 guidelines. There has been a definite upswing in the request for virtual appraisals from our team, increasing substantially since last Tuesday week at the start of the Level 3 activity. Buyers have also been shown through property via private inspections and have shown willingness to transact, with a good early number of sales being recorded.

We expect market activity to continue to lift as properties will now more actively come on to the market. There is a definite pool of buyers who are waiting to purchase and they are actively looking at properties through the virtual platforms and also private inspections. The potential change in levels will allow more activity to occur and while we see a lot of opportunity at this time in terms of getting properties ready for the market, putting them on the market will allow visibility of individual properties ahead of what could be a lot of market activity.

Hayden Stanaway, Bayleys director of Auckland and Wellington residential

New Zealand has never experienced this degree of social disruption and economic turbulence before so research into, or comparisons with, previous financial disruptors, such as the 1987 sharemarket crash or the 2007-2008 Global Financial Crisis, are vague at best.

Unquestionably, there will be a residential property market at the conclusion of lockdown. The drivers of this market will be the same as they ever were — employment, immigration, and mortgage interest rates.

What is certain is that employment in New Zealand will take a negative hit — and with it, general economic confidence. Secondly, immigration will be limited to New Zealanders returning home from abroad, and a very small number of new immigrants who received the relevant residency documentation before our borders shut down. Thirdly, mortgage interest rates will remain low for the foreseeable future.

So, two of the three drivers of the residential property market will be, for the most part, stymied.

To what extent the three market driver impacts will have on both sales volumes and property values we don’t know, as we really have nothing to compare this current state to.

Life, and with it the residential property market, will, however, continue on — albeit in an environment noone has seen before.

Josephine Kinsella, LJ Hooker NZ chief executive

Growth has slowed, not surprisingly, given the increase in economic uncertainty through March and April.

In the months ahead, removal of the LVR speed limits may have a balancing approach but probably won’t alter that outlook very much until there is some certainty around employment.

The new landscape has certainly seen a market hungry for innovative technology and our agility has allowed exciting delivery and adaptation of tools to support both vendors and potential purchasers.

Our industry is well set up to operate in the new business environment.

It’s now up to lending institutions and the Government to do what it takes to get New Zealanders through this and allow us to kickstart the economy.

Barry Thom and Grant Lynch, UP directors

UP has been an early adopter of virtual viewing and 3D tours, and that has enabled our agents to qualify buyers more thoroughly than they would have normally done under old open home rules.

But our focus is now on Alert Level 2 and ensuring the lifting of current restrictions. If we can manage social distancing in a supermarket, we can do that in open homes with all the right safety protocols.