[Opinion]Two years of COVID – what have we learnt in the property world?

It’s now two years since the pandemic started in earnest in NZ, with our first case on 28 February 2020, borders closed to non-citizens/residents on 19 March, and the first full alert level four lockdown at 11:59pm on 25 March.

It’s been a bizarre period for the housing market ever since, with initial predictions of significant rises in unemployment and large falls in property values turning out to be way off track. Indeed, after an initial four to five month period of housing uncertainty, the policy changes that were aimed at supporting the real economy – e.g. official cash rate cuts, quantitative easing, wage subsidies – also indirectly boosted the property market. Of course, direct measures such as the removal of loan to value ratio speed limits also played a key role, and since August 2020 the average national property value has risen by 41.6%, or $307,245.

By territorial authority area, three have seen post-COVID growth in average values in excess of 60% (Wairoa, South Wairarapa and Tararua), another 16 have had increases of at least 50%, and only one has been less than 25% (MacKenzie at 16.4%). In other words, it’s been a large and synchronised boom, reflecting common drivers, including low mortgage rates and tight listings.

Of course, that upswing is now quickly giving way to a sharp slowdown, and as affordability constraints bite, mortgage interest rates rise, and credit availability tightens, outright falls in property values in some parts of the country could well be on the cards in the coming months. In other words, we now seem to be quickly shifting into a ‘buyer’s market’.