28 Apr 2020

Housing market predicted to pick up as Covid-19 restrictions ease

11:24 am on 28 April 2020

By Eva Corlett, Housing Reporter

After a period of hibernating over the lockdown period, the housing market could pick up again under alert level 3.

Open home sign at a house for sale in East Auckland

Photo: RNZ / Claire Eastham-Farrelly

The ability to finalise sales ground to a halt under level 4.

But from this week, private property viewings have been given the go-ahead and some lending restrictions are being loosened.

Figures from the Real Estate Institute New Zealand show the number of properties sold and listed during late March hit record lows.

The Institute's chief executive Bindi Norwell said April figures are yet to be finalised, but they too will be low.

"We've had really minimal sales. People have been purchasing property online virtually but not as much, so we expect to see quite a dip in April," she said.

"Now we have clarity of what level 3 looks like, we may see some up lift in the market."

One of the largest barriers to house sales was the inability to view the property in person.

But the government has confirmed that private, tightly-controlled, viewings can now go ahead during level 3.

The owner of Century 21 New Zealand Derryn Mayne said this will make a big difference.

"At the moment we've got vendors stuck in their homes that have sold, and their settlement was supposed to be two weeks ago, but they are still sitting there waiting.

"The private viewings and pre-settlement inspections means we can actually settle these properties and allow people to move on," she said.

The industry said it's hard to tell who will be selling and buying in the coming months, until the real effects of the pandemic become apparent.

CoreLogic's senior property economist Kelvin Davidson predicts property investors may be the first to sell, as tourism dries up and tenancies become harder for some renters to sustain.

And while that could affect prices, he doesn't think it will be the 15 to 20 percent price drop that some economists predict.

During the global financial crisis, prices dropped by 10 percent, but this time around banks are supporting the market rather than pulling back from it, Davidson said.

"At worst, we might see at 10 percent price falls and I think it could be less than that."

He expects it to sit somewhere between 7 and 10 percent.

Still, Davidson said this could be a boost for prospective homeowners, who have been locked out of the market.

"It will bring housing into reach for some one who has been in the margins."

Last week, the Reserve Bank of New Zealand announced it will remove loan to value ratio limits on low deposit borrowers for at least a year.

Davidson said this should also help people looking to buy.

Norwell believes there will be movement in the market as the country moves into level 3, despite the uncertainty that lies ahead.

"There was a lot of activity still - people were still searching, listing their properties," she said.

Norwell said now that we're in level 3 we may see a flurry of activity in the housing market.

She said the industry will be sending out details to clients about how to set up viewings, once the guidelines are finalised by the government.

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