House prices were up 10.87% y-o-y in Q1 2020
New Zealand’s house prices continue to rise strongly, as the impact of the ban on non-resident foreign homebuyers has waned. Median house prices surged 10.87% (inflation-adjusted) during the year to Q1 2020, following y-o-y rises of 10.28% in Q4 2019, 5.82% in Q3, 2.74% in Q2, and 8.76% in Q1. On a quarterly basis, real house prices increased 2.55% in Q1 2020.
Demand and supply falling
Demand has deteriorated rapidly in recent months due to COVID-19 lockdowns. Property sales in New Zealand plummeted by a whopping 78.5% y-o-y to just 1,305 units in April 2020, according to the Real Estate Institute of New Zealand (REINZ). In Auckland, the number of properties sold in April dropped 68.8% y-o-y to just 538 units. For New Zealand excluding Auckland, property sales plunged 82.4% y-o-y to 767 units over the same period.
Likewise, the number of properties available for sale fell by 29.3% to 19,702 units in April 2020 from a year earlier – the lowest level of inventory for the month of April since records began.
Rents, rental yields: Good yields at 5.48%
Apartment costs in Auckland are around $7,209 per sq. m.
|New Zealand: typical city centre apartment buying price, monthly rent (120 sq. m)|
|Buying price||Rate per month||Yield|
Recent news: For the last six years New Zealand's economy’s performance has been robust, with growth of 2.2% in 2019, 3.2% in 2018, 3.8% in 2017, 4.2% in 2016, 4.1% in 2015 and 3.2% in 2014. However, economic activity is now projected to fall as much as 7.2% this year, as the effect of lockdowns and travel restrictions associated with the COVID-19 pandemic hits, based on IMF projections.
In March 2020, the Reserve Bank of New Zealand (RBNZ) decided to cut the Official Cash Rate (OCR) by 75 basis points to a historic low of 0.25% in an emergency decision, after the outlook for the economy had deteriorated significantly.