MARKET REVIEW APRIL 2020

KIm Rio from Cox Partners Estate Agents

Market Review April 2020
After over 5 weeks in lock down the housing market is open for business again. Inspections, settlements and relocation can occur.

Restrictions still apply including health screening, physical distancing, contact tracing, hygiene practices and personal protective equipment.

Entering the COVID-19 crisis data indicated that the fundamentals of the Hawkes Bay property market were solid.

Coming out of Alert Level 4 lockdown we’ve observed that the demand for property in our region still exceeds the supply.

This biggest factor dampening demand for and values of property is a rise in unemployment, however economist Tony Alexander points out that many people tend to be overly pessimistic, forgetting about the supportive, insulating factors which encourage recovery.

Alexander identifies four such factors likely to moderate declines in the real estate market:

Low Interest Rates
Record low interest rates are heading lower and likely to stay low for three to five years. Low rates not only improve affordability for owner-occupiers like first-home buyers, they also encourage investors toward shares and property.

Investors switching to residential
As business tenants seek long-lasting rent reductions or vacate their premises, commercial investors are likely switch back to residential property.

Economic stimulation
When the central bank “prints money” to boost economic growth, some funds find their way into asset markets (shares and property) and push prices higher.

Money saved
During lockdown, in the absence of money being spent, people with jobs see their potential house deposit rise. Some may realise that if they maintain this frugality over coming months, this will offset KiwiSaver losses and build a better house deposit.

While the full picture is still emerging, on balance we believe any negative impact on local real estate market may be short-lived. If we move to lower Alert levels during the next few weeks, property commentator Ashley Church believes recovery will be relatively swift.

In the meantime, at Alert Level 3 our office is closed to the public but our work continues (within Ministry of Health guidelines). We are available to appraise and list property for sale, arrange private inspections and for consultations and advice. Call us anytime on (06) 835-4321.