The property market is December 2019
More sales and higher prices was the message for December as 2019 came to a close. Nationally in 2019 the median house price rose by 12.3%, starting the year at $560,000 and
ending at $630,000 in December.
In Auckland the median house price rose by $30,000 to $890,000 which was a mere 3.5% increase. Only the West Coast region saw a fall in the median price in 2019 which was down 13.6% to $190,000.
The other 15 regions all had price increases.
Record median prices were achieved in:
Northland up 12.3% for the year to $539,000
Tasman up 12.5% for the year to $655,000
Taranaki up 14.1% for the year to $430,000
Manawatu / Wanganui up 27.8% for the year to $402,500
Southland up 32.0% for the year to $330,000.
The most spectacular change in December to end the year was the number of sales.
New Zealand had the highest number of sales for a December month for 3 years up 12.3% on December 2016. In Auckland the number of properties sold in December increased significantly by 31.7% to 1860 which was the highest number of December sales for 4 years! The time residential properties took to sell fell in December too. Nationally the average days to sell was 31 which is 4 days less than December 2018.
In Auckland the average days to sell was 34 which is 5 days less than December 2018. The number of new listings of properties for sale in New Zealand was 7874 for December which is the lowest number since data was started in 2007.
What Will Happen To The Housing Market in 2020
2019 was a tale of two halves in New Zealand. House prices rose strongly throughout most of the country except for Auckland (which is 30% of the market). The LVR (loan to value ratio) imposed a significant brake on the market especially in Auckland.
Initially at 20% deposit for first home buyers and 40% for investors these were amended to 20% and 30% respectively. With the threat of a capital gains tax removed during the last year, the easing of the LVR, low interest rates and a shortage of properties, prices (even in Auckland) began to move up in 2019.
So what about 2020?
The LRV may be slightly eased during the year but if prices surge that is unlikely.
The low interest rate reign (3.39% fixed– 1 year currently) is with us for some years to come. There is more possibility of a further rate drop than increase in 2020 but it would be very small if it occurred.
The economy is preforming pretty well. Business confidence is low, meaning businesses are not investing in capital equipment and that will fall on business efficiency and so the economy in the future but not in 2020 – its election year.
The government will spend, spend, spend to try to get re-elected. That will further stimulate the economy and give confidence to employers.
What about employment and housing?
There is a shortage of workers in many sectors, not least the building and construction industry which means catching up with the shortage (and growing larger) of houses will not happen for several years.
Net migration to New Zealand in 2019 remained high at around 41,500. This means around 15,000 more houses need to be built just to house this section of the population before any dent can be made on the housing shortage.
The 100,000 affordable homes promised was just a dream which turned into a nightmare for the government. Refusing to allow extra builders and construction workers to immigrate to New Zealand will lengthen the time to build enough houses. There is simply not the capacity to build more than around 35,000—40,000 per year so the shortage will continue for some years yet.
The shift of use from rental or owner occupied to Airbnb towards accommodation for the tourist sector has removed thousands of houses from the pool for kiwis to occupy. This is likely to continue in 2020.
New Zealand treasury predicts prices to increase nationally by 4.9%. Westpac predict prices to increase nationally by 7% in 2020 and be most pronounced in Christchurch and Auckland. ANZ are predicting an 8% price rise in 2020. Locations such as Christchurch and Auckland are likely to see 10%+ price increases in 2020.
It is all bad news for tenants with respect to rents which are predicted to continue to rise. The shortage of houses and now the Healthy Homes Act will add thousands of dollars to landlord’s costs which will be the main drivers of rises.