Property market: Where to from here?
What’s next for property market? It’s the question that industry experts are pondering right now, as the last pre-lockdown data becomes available.
The latest QV House Price index, focusing on the month March, shows that the property market was continuing to perform strongly throughout early-mid March, but it doesn’t provide any insights into what may be in store for next few months.
Here’s some food for thought from reputable industry commentators.
“There will be still be a property market”
“Nobody knows what post-lockdown market conditions will look like,” said QV general manager David Nagel. “We’ve never been through anything remotely like this. We also do not know how long this will last. What we do know is there will still be a property market. There will still be sellers, although likely only a fraction of what we’re used to. And there will still be buyers that have the means and confidence to purchase property.”
According to Nagel, the upcoming trends in house prices will largely depend on market forces, as well as the changes in supply and demand. With fewer vendors coming to market, supply of properties for sale may be reduced. Demand might also drop, with some first-home buyers delaying their property move.
Having said that, Nagel is positive that lenders will take a flexible and considerate approach to borrowers’ circumstances. Plus, there could be room for a buyers’ market to develop, due to some New Zealanders having financial capacity to take advantage of lower-than-ever interest rates.
As for the time horizon for a return to ‘business as usual’ Nagel predicts that limited transactions will likely continue after lockdown ends, and uncertainty may remain through to the end of 2020 while the economy finds its feet again.
Weighing up the positives and negatives
Independent economist Tony Alexander has recently looked at the positives and negatives of the house market, and how these may affect its performance in the near future.
On the negative side, Alexander listed things like loss of job security, loss of retirement wealth (which could lead people to downsize to more affordable properties), and fewer aspirational purchases.
On the positive side, Alexander noted that low mortgage rates are still up for grabs, and those are likely to remain low for the foreseeable future. More people may start working from home on a regular basis and might look to swap for a bigger house soon. With construction of new houses being at a standstill for one or two months, supply growth may also slow – supporting property prices. Plus, Alexander says, this lockdown period may lead to a new ‘baby boom’, which might prompt young families to upsize.
Also on the positive side, significant stimulus measures and other forms of support have been put in place to help New Zealanders weather the storm. And it’s important to remember that – as trying as it might be at the moment – this recession is likely to be temporary. In the meantime, Alexander added, “the property market will find its new normal.”
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