An expert says gains are a “stark contrast” to crash predictions
The proportion of New Zealand properties being resold for a gross profit was 99.0% in the three months to June 2021 – the highest on record according to CoreLogic’s quarterly Pain & Gain report.
The report also revealed that the national median resale gain in the three months to June 30 was $347,500 – a new record high.
Read more: Report reveals New Zealand homes doubling in value
Kelvin Davidson, chief property economist at CoreLogic, said the median resale gains were a stark contrast to the housing market crash predictions made in mid-2020 at the height of COVID-19’s first wave.
“The June quarter results are on top of previous gains, which means anyone who’s held their property for the traditional seven to 10-year period will inevitably sell for substantially more than they paid,” Davidson said. “With unemployment still low and mortgage rates set to remain well below past norms, an outright downturn seems unlikely, assuming homeowners, especially recent entrants to the market, are aware of the rising interest rate outlook and are making adjustments accordingly.”
In terms of resale gains, Wellington led with $535,000, followed by Auckland with $490,000 and Tauranga with $437,500.
Davidson cautioned, however, that these strong ‘profits’ for resellers predated some of the new macro prudential measures introduced and the August lockdowns – especially since there’s still lingering uncertainty around the potential knock-on effect an extended lockdown could have.
“Regulatory pressures have been quickly increased in the past six months, including the looming tightening of the speed limit for owner occupier lending, which we suspect will hit first home buyers quite hard,” Davidson said. “On top of that, mortgage interest rates have already risen and there is plenty more scope for further increases over the next 12 to 18 months. That could be problematic for stretched recent buyers, or even existing owners who have traded up with potentially larger mortgages than before.”
