Okay Google –Why is New Zealand real estate so expensive? – A common search term that has risen during 2020. We spoke with one real estate professional in Whangarei to shed light on the issue;
Shored up by very low interest rates, demand for real estate is seen to continue its upward trend throughout 2021. In the January update released by the Real Estate Institute of New Zealand (REINZ), property sales across the country shot to 36.6% with 8,935 units sold at the end of December 2020 compared to 6,543 units sold in December 2019. However, the limited number of units that are available in the market are causing house prices to soar. The year 2020 ended with a record low number of available properties at 12,932 units, almost 30% less than the number of properties listed in 2019.
Low number of dwelling consents
The negative impact of pandemic is still felt in the real estate sector. Apart from very few houses and properties listed in the market, construction is also affected. Dwelling consent application has slowed down significantly, with only 3% year-on-year from February to December 2020 filed. This is far from the recorded 14% annual average growth in dwelling consents from 2011 to 2019.
However, the slow growth in the construction of homes has not adversely affected the overall rate of employment in the construction sector even though many workers were furloughed during the lockdown period. Based on the latest statistics posted on stat.gov.nz, 13,200 new hires in construction services were made in January 2021. This would include workers specialising mainly in residential building construction. Meanwhile, in 2020, there were 21,000 workers in the construction industry that were hired.
There had been fears that soaring prices of homes for sale would discourage investors as well buyers to dive in. But real estate experts that looked into the performance of New Zealand property sector during the pandemic have positively noted the high number of properties sold. This means that housing properties remains highly in-demand. Expensive or not, New Zealand homes are sought after by property buyers because of a number of reasons, but mainly due to the favourable conditions as far as controlling the pandemic is concerned.
Housing affordability remains to be a major problem across the country. REINZ have called for a combined response from Government and the private sector to find solutions to make housing more affordable to citizens.
The numbers also how that more expensive homes have become the property of choice for buyer in New Zealand. The number of homes sold for a price lower than $500,000 decreased from more than 2,000 properties in December 2019 to 1,721 properties in December 2020. Properties that were sold within the range of $500,000 to $750,000 also decreased 3%.
Noticeably, there were more properties that are priced at $1 million or more sold in December 2020, totaling 2,483 properties compared to December 2019 when there were just a little more than 1,000 properties sold.
Whether New Zealand rose among the ranks of most unaffordable housing market in the world in the past year, you can visit some of the New Zealand property websites to get help in looking for median prices. Don’t be afraid to ask yourself What house can I afford to buy in New Zealand? And share your answer to your trusted New Zealand real estate professional who are willing to help you find your perfect home!