Demand for property increases in a market favorable for buyers

Supply is finally meeting demand as the market continues to bounce back, with sales remaining steady and low mortgage rates attracting first time buyers.

Here’s what you need to know:

Supply Meeting Demand as The Market Continues to Bounce Back Post-COVID

Many different sources are indicating that the market is bouncing back quicker than expected as new data from the first week of Level one becomes clear.

Buyer demand on Trade Me Property has soared in the months since lockdown ended, with the property website’s latest data indicating that the number of views in May were up by 11% on April and by 69% when compared to the same time last year.

Trade Me Property spokesperson, Aaron Clancy stated that the activity was not only up in views, but with contact being made between buyers and sellers as well as “watchlist” adds. Clancy said these were great signs that the market could remain stable and active through-out winter, “While the property market typically cools during the winter months, we’re already seeing signs that the Covid-19 enforced lockdown could see New Zealand buck this trend in 2020 and we might be in for a very busy winter ahead.”

The latest auction results also suggest activity is recovering well from the COVID-19 lockdown, with more properties auctioned last week than the comparable period of last year.

The number of properties coming to auction continues rise sharply, a trend that has been ongoing since the end of lockdown. Barfoot & Thompson marketed 102 residential properties for sale by auction last week, up from 85 the previous week and 45 the week before that.

In the week from 8-14 June interest.co.nz recorded 97 auction sales which gave an overall sales rate of 45%, which is slightly up from the same time last year where the sales rate was 41%.

Not only are sales remaining steady, but prices on sales also appear to be holding their own, where interest.co.nz was able to match selling prices with rating valuations on the properties that sold last week, almost three quarters (73%) sold for more than their rating valuations.

Current Market Conditions Proving Favorable for First Time Buyers

In its monthly property focus report, ANZ mentioned that despite a predicted drop in house prices, the market has been recovering well and expects low mortgage rates to attract first time buyers to the market in the coming months.

The report stated that in the reopening of the market saw some positive aspects in the market, “there has been a bounce in spending and positive anecdotes about the housing market” and that to try keep the recovery moving in a positive direction, mortgage rate will remain low for the foreseeable future, “It will be a slow economic recovery, which means mortgage rates will be low for a long time.”

It seems that first time buyers are the main group being lured into the market with the low prices and mortgage rates, with Trade Me revealing that there were twice as many 19-to-30-year-olds browsing Trade Me property listings in May compared to the same time a year earlier.

Head of Trade Me Property Aaron Clancy stated that this is a continued trend that was already happening before lockdown, “This is a continuation of the trend that first emerged in April, when we saw a 38 per cent year-on-year increase in the number of under-30s browsing property when compared to the same month in 2019.”

It will remain to be seen if this group invests in the market in the coming months, but with LVRs being scrapped and interest rates at all-time lows it’s an attractive time for many to invest in the market.

-by Ravi Mehta, from Professional Financial Solutions