It’s too early to report whether the Government’s shock announcement on March 23rd, which took away investors’ ability to tax deduct interest on their rental properties and increased the bright-line to 10 years, has had the desired effect of stemming runaway house prices. Anecdotal reports from agents in the last few weeks have indicated that investors have stepped back from certain sectors of the market, but interest in new-builds have increased. It’s going to take a good few months for the consequences of these policy changes to take effect and for any trends to begin to emerge. In the meantime, it’s still all steam ahead.
What we can report is that during March and early April median prices continued to spiral upwards, as did the number of properties sold. According to latest figures from the REINZ, the median prices for residential property across New Zealand increased by 24.3 percent, from $665,000 in March 2020 to $826,300 in March 2021 – a new record high for the country. In line with this trend, Auckland’s median house price increased by 18.5 percent, from $945,000 in March 2020 to $1,120,000 in March 2021 – also a new record for the city.
Wendy Alexander, Acting Chief Executive at REINZ said that March was another incredibly strong month from a price perspective, with houses selling at their fastest pace in a March month ever. She also notes that March witnessed the highest percentage of auctions the country has ever seen since REINZ began keeping records, showing just how quickly the market is moving.
Her prediction is that house prices will continue to rise over the next couple of months, but hopes it will be at a slower pace than the country has seen over the last 6 to 12 months, which will culminate in a general slowdown of prices, thanks to the re-implementation of the LVRs and latest changes in Government policy. These sorts of price rises are unsustainable and show just why New Zealand continues to top the league tables of most unaffordable nations in international studies, she adds.
Back to the statistics, and the number of properties sold in March in Auckland increased by 49.9 percent year-on-year, from 2,583 to 3,872 – the highest for the month of March since records began and the second-highest number of properties sold ever. To add to that, the median number of days to sell a property decreased by two days from 33 to 31, the lowest for the month of March in six years.
Auctions continue to be the most effective method of sale at Ray White Damerell Group, with almost 80 percent of our vendors choosing to go to market with their properties via auction in March. And who can blame them, with our market-leading 88 percent success rate (10 percent sold prior) of properties sold on the night. Nationally, the popularity of auctions has also soared, with March witnessing more than a third of all properties sold by auction – the highest percentage of auctions ever seen in New Zealand.
In conclusion, March was another stellar month for Ray White Damerell Group; with the vast majority of suburbs we work in reporting near record figures for sales numbers and prices achieved. Whether this market can or will continue its upward trajectory, now that the Government has started pulling levers behind the scenes, only time will tell.