The latest report from property site realestate.co.nz shows that while the national average asking price for houses has gently cooled, Auckland, despite the tough lockdown, saw a new 14-year record high, up by 2.6% from August and up 22.5% when compared to September 2020.
The September NZ Property Report revealed that new listings remain a challenge throughout the country primarily on the back of the nationwide lockdown during the month. Auckland had the biggest gap, with a 57.9% drop in new listings as agents and sellers were unable to hold open homes.
In the release, Sarah Wood, CEO of realestate.co.nz, says it’s difficult to tell what impact Delta has had on the market.
“It would be easy to assume that a lockdown would have a major impact on asking prices. We saw a jump in average asking prices in Auckland after COVID April 2020, but that could have been due to a number of factors—expats coming home, favourable interest rates and access to lending.”
“What we can certainly expect a lockdown to affect though, is new property listings. Agents can’t hold viewings during Level 4 and the restrictions are tight in Level 3,” Sarah continued.
Gary Bal, Director and Licensee Agent, Century 21 Local Realty, says that with Level 3, buyer and seller interest has increased.
He says, “Buyer enquiries have gone up again. Even, during the lockdown, there were more enquiries because people were staying at home. We find that more people are now coming to view houses, want to buy them. With owners, and new listings, I'm seeing the confidence coming back again because everyone was waiting for Level 3 to come in so they can go see houses. The confidence is coming back with the owners.”
With asking prices steadily climbing month after month and reports of many new builds selling for higher than their valuation, the report discovers that many first-home buyers are looking to townhouses and apartment dwellings to climb onto the housing ladder.
“The lock-up and leave lifestyle is commonplace in many countries around the world. Although it’s not the quarter-acre dream, many European and Asian countries have turned apartment living into a fantastic lifestyle,” said Sarah.
“This month, the average apartment in New Zealand was priced at about $750,000 according to our data, which poses and interesting question about what it means for a home to be affordable. There are certainly many conversations to be had about futureproofing the market for our young people.”
Prateek Malhotra, Loan Market Mortgage Adviser at Loan Market believes first home-buyers are turning to apartment because that’s the only option left for them.
He says, “Most of them would like to buy a standalone houses but you could say that they are being forced to look into town houses or even apartments. Because the reality is that it's getting out of hand in terms of the prices. The range is so high that they can’t really get into that as a first home buyer. So the only options left for them are townhouses and apartments.”
Gary concurs, “The problem is that lot of first home buyers can't even afford townhouses as the cost keeps going higher. Terrace houses that were going sold for $750, 000 to $800, 000 earlier this year, have now gone up to $ 950, 000.”
Ajay Kumar, Director, Global Finance Services believes life for the first-time buyer is about to get tougher.
He says, “The reason being the latest decision taken by the Reserve Bank of New Zealand. Effective from October 1, 2021, banks are allowed to give only 10% of the total lending to first home-buyers.
"Prior to 1st October, it was 20% of the total lending so banks were quite liberal because they could give more loan. But now that limit has been reduced to 10%, the amount available to first home-buyer will be less.”
Encouragement by the Reserve Bank of New Zealand to buy new homes could also pose a challenge to the buyer, according to Mr Kumar.
He remarks, “There is a freedom or relaxation on buying new houses. If you are buying homes for which CC has been received very recently or is yet to be received, there is an exemption from the Reserve Bank of New Zealand where people are encouraged to buy new houses to get more construction, more supply.
"But the question is where is the supply, where are the ready houses? Because we know that there is a building material supply shortage, logistic problems, labour shortage. So what I’m finding is that from the month of October, the overall scenario has become difficult for the first home buyer.”
His suggestion to first home-buyers - plan their income, and expenses carefully. He recommends, “First home buyers have to now plan very carefully to be successful to get a loan from the bank to enable them to buy a house.
"Every first home buyer must plan - what’s the size of the house they want to buy, what will be the likely purchase cost, how much deposit can they put in, what will be the lending criteria, how much income will they need, and if they don’t have the income, they must reduce their expectation or budget, so that they qualify, especially for those having less than 20% deposit. “