All bets back on!
It’s fair to say that as we came out of lockdown, few of us were prepared to predict exactly how, or if the housing market was going to rebound. However, after witnessing what can only be described as an extraordinary month’s trading in June, it’s clear that a wave of motivated buyers have made their intent very clear.
As we approach the end of July and look back at the principal drivers of this resurgence, it now becomes obvious why the market reacted the way it has, and why we should have confidence as to where house prices are heading.
Firstly, there has been a notable buyer interest from those who were planning to travel in 2020, but can no longer do so – particularly those first-timers, who, instead of embarking on their planned OE, are now settling down and buying at home in New Zealand. And then there are the baby boomers and retirees, who have also had their travel plans dashed by the pandemic, and have subsequently redirected funds into making significant investments to their homes.
We also have record-low interest rates and the removal of loan-to-value lending restrictions (LVR), which combined, have greatly increased home affordability for all ages – but particularly first-time buyers. Add to that the tens of thousands of Kiwis who have returned to New Zealand from overseas (and continue to do so) and you have a bubbling cauldron of cashed-up buyers eager to get onto the property ladder.
Overall, there has been a strong rebound across the board – not just with sale prices and sales volumes, but also with the number of buyers coming through open homes and also the spike in pre-approved loans. And then there’s the strength of the under bidder market – where the next best offer was and where came from, because that’s a very good indicator of the actual strength of the market. The under bidder pool is where the next round of buyers will come from. Lately, our under bidders have been very close to the eventual sale prices, which tells us it’s a strong market out there.
A metric that doesn’t appear in our latest statistics is the level of stock we are carrying, which is currently significantly higher than last year – 94% up year on year. This figure tallies with the fact that Ray White Damerell Group has doubled its market share in Greater Ponsonby over the past 12 months, with the addition of 13 new agents working in Ponsonby alone, meaning that we will have plenty of quality properties coming onto the market during August and September.
As we move out through the Western Corridor, June saw a busy month of trading compared to this time last year – 22% up on properties sold. This was likely a sign of sellers holding out for lockdown to end, pushing the selling session out a little.
There was also an 18% increase in median sale compared to this time last year, indicating the strong demand from first-time buyers in these suburbs.
North Shore Commentary
Open homes were busy throughout June, with some properties attracting 40+ groups over a weekend. These numbers were reflected when it came crunch time, with multiple bidders for most properties and packed auction rooms.
With money cheaper than ever and somewhat easier to borrow, first-time buyers made up a significant number of those keen to acquire a new home. Our property at 14 Raymond Terrace, Northcote, is a good example of this, with 64 groups through in the first two weeks, and now sold by pre-auction offer. Those pre-auctions indicate a real sense of urgency with buyers looking to secure a home and get ahead of competition.
June also saw a return to good sales volumes, with numbers up 100% up on May. It was pleasing to see an increase in median sale prices, which were up 7% up on the previous month – likely a result of stock shortage and strong buyer demand. This translated into a steady 3% increase year on year for the Lower North Shore, as a whole.