Homeowners are left in limbo, wondering whether to buy or sell and what is to be of their largest asset. With mortgage holidays and wage subsidies in full swing, it may be a few months yet before we see the full effect of Covid-19 on the property market.
With a nationwide uncertainty in the housing market, QV General Manager, David Nagel explores what homeowners can expect with the market in the coming months.
See what David Nagel had to say about first home buyers, investment properties and holiday homes in the Stuff Q&A Livestream below:
"Hello David, what is your thoughts on the higher end Whangarei Market? Also what is your thoughts for those that have been impacted by a drop in income from COVID and need to make that hard decision to sell their house as they may no longer be able to afford the repayments, is this an effect you expect to see happening in the next month or more likely 2-4 months from now?"
"I think with banks providing homeowners options around mortgage holidays etc and also Govt wage subsidies being extended, it will take some time for the full impacts of C-19 to be reflected on the property market. It may be closer to Christmas before we see the full effects reflected in prices."
"Hi David, I own a property in Nelson. I would like to sell this and buy two rental properties in Auckland city centre. Do you think the rental market in Auckland city centre will stay strong? Thanks Dan"
"Central Auckland apartment accommodation will likely be impacted by both tourism and also a reduction in international students. I'd be cautious rushing into this type of investment. However, I am hearing of insatiable demand for these types of properties currently in Auckland from cashed up investors and first home buyers. The big question is will this last as more stock comes on stream."
"Rotorua has experienced good growth in the last 3-4 years or so. Are you expecting the property market there to slow or even decline given that Rotorua has a large dependence on tourism? Or, should it hold its own due to other supporting industries such as forestry etc? Russell"
"Hi Russell, I think Rotorua is potentially a hot spot given the heavy reliance on tourism. As you say, it has experienced good value growth and its resilience will be determined on its ability to find work for those affected by job losses from the tourism sector."
"Hi David. I'm curious to know your views on when property prices will reach a trough. Appreciate it's such a difficult thing to pinpoint and there is a myriad of factors at play, but would be good to know:
(i) When you think prices will start to increase again,
(ii) What the key precursors will be indicating prices are on the rise again. On (ii) - are there specific indicators that one could look out for that might suggest that property prices will increase again in (say) three months from that point in time. Thanks Julian"
"Hi Julian, tough to know when the market trough or bounce. Much will depend on our success as a nation as we traverse the levels. A return to level 3 or 4 would be disastrous for the property market, while expanding our bubble in the near future with Australia will significantly lessen the risk of a major downtown in property values....
The next 6 months will be critical to the property market as mortgage holidays get to the end of their 6 month grace period and the impacts of the economic downturn start to impact employment. Look at the impacts on NZ tourism filling the void left by oversees travellers as well the impacts on nationalism encouraging buying NZ made products, which will lessen the impact on employers. There will always be strong links with employment and house prices, so the various regions in NZ will respond differently to this pandemic."
"Hi David. I rent in Auckland but have owned a rental property in New Plymouth for the last couple of years. Property values in NP has been slow but steady. Am I better off selling and buying closer to home to save the rent or holding on for a little bit longer?"
"There's always costs to sell a property. Your buying power in Auckland will also be significantly less than New Plymouth. But it would be more convenient to be closer to your investments to enable better management of your property. Look at your budget and see what you can afford in Auckland to help you decide what's best for you."
"Hi David, given COVID-19 has affected trade in many ways, will new builds starting to take off shortly struggle with procuring the necessary raw building materials from overseas and if yes, does that mean signing up for new builds is a bit risky at this point?"
"There is uncertainty around the supply of raw materials for new housing developments and this will likely impact building costs. But we'll also likely see a falloff in building consents, ultimately impacting the labour component of new build costs. This will take time to be reflected in the market and in the meantime, make sure you get your purchase contracts thoroughly checked by your lawyer."
"Kia ora. I live in Ngaruawahia. There has been an increase in home prices here and there has been an influx of first home buyers who cannot afford to buy in Hamilton. Do you think the effect of Covid 19 will slow the housing market for this satellite community? Do you see any effect on rural lifestyle property values n or around Gordonton (also in the Waikato)? Thanks and stay safe. Noho ora mai Ra."
"Hi Ra, we saw a lot of value growth pre-Covid in the satellite towns of NZ's main centres. There's certainly questions around how sustainable this is. Much will depend on the availability of future employment. Where there are jobs, then there will be demand for housing."
"Hi David, I'm 24 and have $43,000 saved in my KiwiSaver. I live in Dunedin where prices have gone up a lot. Where would you recommend I start looking for a first property to buy? I still live at home and intend to stay there."
"Hi Steven, I would look at areas like Green Island or Abbotsford in the first instance as locations where you can still pick up a home for $400-450,000."
"In Christchurch would you be more inclined to buy a new build or an existing home? Which do you think would be a better buy in 5 years’ time?"
"Tough question. It depends on your personal situation. Buy an existing home and add value through renovations and some design flair? Or buy brand new and enjoy a maintenance free 5 year period? Buy a property that suits your lifestyle."
"I've been saving to buy my first home and thought now would be a good time to buy, but my family says to wait as the market is about to collapse and I'll get more for my money. I know there's always an element of risk, but do you think now's a good time to buy or would you wait a little longer?"
"I wouldn’t be rushing to buy my first home tomorrow, but if you see something you like and it meets your budget, then go for it! There’s a lot of cashed up investors out there looking for bargains and also first home buyers like yourself keen to hop on the property escalator. There’s plenty competing for limited stock in most NZ locations currently. There’s also a level of insulation within the residential market with banks providing interest and repayment free periods, plus Govt wage subsidies will also mean most vendors have time before they make a decision to offload housing assets."
"Do you expect to see a higher demand for baches and holiday homes in the wake of travel restrictions? We have already heard of this happening anecdotally."
"AirB&B operators are reporting high levels of enquiry to 80-85% of pre-covid levels which is encouraging. But we've just come out of lockdown and have a long weekend just around the corner. I'd be cautious if I was seeking to purchase a property and relying on short term income from AirB&B rental."
"We’ve spotted a house we quite like - but it’s on a cross-lease... is this something we should steer clear of? What are the main things we should consider if we progress further?"
"Cross lease titles were once very common in NZ, and were particularly appealing as low cost, low maintenance accommodation options for the elderly. With the rise in popularity of retirement villages, as well as affordability impacting first home buyers, these cross lease units are now appealing to a wider market, especially first home buyers and investors. Make sure you check the cross lease title to ensure the buildings are correctly represented on the Flat Plan. And remember any future changes will require the consent of all other cross lessees (eg adding a carport). Good legal advice is imperative."
"What is happening in the Christchurch market, it seems a bit of a frenzy at the moment with houses getting multiple offers the day they are listed and often under contract same day, Houses are selling for well over the RV making it difficult to determine the best offer or actual value...this was happening both before and after COVID, I have been looking since January 2020,
Do you see Chch as being a heated market, is it best to buy now because the market will bolt?
What is driving this demand?
Do you have any predictions for Chch?
Any clue on best areas in chch for capital gain (inner city suburbs? is Brighton about to take off?)"
"Pre-Covid we were just starting to see some life return to the ChCh residential market after several years of limited growth. ChCh is now has the cheapest housing of all the main centres at around $520,000. Compare this to Auckland at $1.08Mill and even Dunedin at $552,000, it would seem good value for money. But ChCh is a complex market with residential sprawl having occurred in the past 8-9 years post-earthquake creating greater options for buyers. It's likely that Christchurch's more subdued historical value growth will provide more resilience to post-Covid market forces. Take your time and decide what house type and what location will best suit your needs over a 5 year scenario. Time is on your side. All the best."
"What are your thoughts about the Twizel/Tekapo area? Some land is advertised for more than double their RV. Do you think there will be some readjustment there?"
"We’ve previously seen massive value growth in these locations as a ripple effect from the unaffordable Queenstown/Wanaka markets. I expect these markets will be more insulated than the more tourism dependent locations, however the depth of the recession will impact any falling off of values. Its likely vacant land will be more impacted than improved properties as most of us will wish to defer making big decisions like building a house during all the uncertainty, until we come out the other side."
"Why have Dunedin house prices gone up so much and do you think they will drop? We moved to Christchurch nearly three years ago and want to return but unfortunately we have been priced out of the market in Dunedin. Your thoughts?"
"Unfortunately Dunedin's residential market has boomed, while the Christchurch market has stood still over the past 3 years. Primarily it's down to supply and demand. Some massive infrastructure projects in Dunedin have attracted employment and population growth, catching the eye of investors. Plus, a shortage of vacant land for new developments has created the shortage in supply. Christchurch on other hand is the most affordable of our main centres, but post quakes has seen significant sprawl to satellite areas like Rolleston, Lincoln and Rangiora. This has meant limited value growth meaning your buying power if returning will have taken a hit."
Courtesy of Stuff Q&A Livestream