Property Market Refusing To Cool, Price Caps Need Revisiting

“Price growth might be slowing in some places, but overall real estate is still incredibly strong for the middle of winter,” says Derryn Mayne, Owner of Century 21 New Zealand.

Derryn Mayne

Her comments follow REINZ releasing its Monthly Property Report for June which showed New Zealand’s real estate market continues to perform beyond expectations.

June saw median house prices across New Zealand increase by 28.7% to $820,000 in 12 months, and still climbing - up by 0.3% on May nationwide.

With REINZ headlining: ‘House prices continue to rise across the country, defying expectations’, five out of 16 regions reached record median prices, including Auckland up 25.0% to $1,150,000.

Nationwide, the number of residential properties sold was the highest for a June month in five years. At the same time, the median number of days to sell decreased from 46 to 31 when compared to June 2020 - the lowest for a June month since 2016.

REINZ’s latest statistics also reported a dire shortage of houses available for sale – in fact the second lowest level of inventory ever.

The Century 21 leader say low listings remain the biggest problem for agents and buyers alike. However, potential sellers need to seriously consider getting onto the market sooner rather than later.

“With strong buyer demand, strong sales prices, and few competing listings, this winter could prove stronger than next summer, particularly if interest rates start going up,” says Ms Mayne.

She says real estate agents have reported a bounce – four months after Government and Reserve Bank policies started to take effect to try to cool the housing market.

July’s REINZ & Tony Alexander Real Estate Survey was recently released. It revealed a net 53% of agents continue to feel that prices are rising in their area, compared to 32% last month. At the same time, a gross 60% feel that FOMO (fear of missing out) remains a factor for buyers – up from 51%.

Ms Mayne says it’s increasingly clear that Treasury’s forecast back in May of house price growth falling to 0.9% by June 2022 looks unlikely.

“Given the unrelenting strength of REINZ’s numbers, it’s now time for the Government to revisit its price caps to enable more first-home buyers access to First Home Grants and Loans. Yes, they were lifted slightly on 1 April, but they’re still woefully inadequate, killing the Kiwi homeownership dream for thousands.

She says with Auckland’s latest record median price at $1,150,000, its new caps of $625,000 for existing homes and $700,000 for new builds are a joke. She believes Housing Minister Megan Woods now needs to take an urgent proposal to Cabinet to revise the price caps nationwide.

“For as long as servicing a mortgage remains cheaper than paying rent, REINZ’s monthly sales statistics will continue to show a very strong market. The Government now needs to accept this reality and lift the price caps accordingly.

“Let’s allow more first-homes buyers into the market, enabling them to get record low interest rates while they last,” says Derryn Mayne.

www.century21.co.nz

© Scoop Media