Sales evaporate during lockdown

Malcolm Cox from Cox Partners Estate Agents

The nation welcomed a move to Alert Level 2 last week. Real estate activities have resumed, with added requirements for contact tracing, physical distancing and hygiene etiquette.The protocols we developed and refined during Alert Level 3 will continue through Alert Level 2.

During the Level 4 lockdown period there were high traffic volumes through the online real estate portals and social media pages as people continued to search for property. As we entered Alert Level 3 we were kept busy with contactless final inspections, settlements and buyer inspection, particularly properties priced around the mid-range.

On Friday, REINZ released data for sales in April 2020 and as expected with the first 27 days in Level 4 lockdown, volumes dropped drastically.

In Napier just 19 homes sold, 85% fewer than the prior month. Approximately one third of these sales were negotiated in March, and two thirds following the post Easter move to Level 3. When offices opened under Level 2 late last week, enquiry has been consistent and steady which makes us cautiously optimistic.

Three factors are most likely to affect the recovery of the real estate market in Hawkes Bay and elsewhere:

1. the number of listings;
2. consumer confidence;and
3. the availability of finance.

We expect activity will take a couple of months to revive and the data over the next few weeks will provide a clearer picture of what to expect. The 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:

1. record low interest rates which improves affordability;
2. investors switching from commercial property and shares to residential property;
3. economic stimulation attracting funds to the asset market; and
4. money saved by people with jobs which increases their potential house deposit.

As we re-establish ourselves in the aftermath of the Covid-19 pandemic there are several possible pathways the country could follow ranging from terrible to pretty good. None of them are guaranteed.

What is guaranteed, is that we are here to help.

For more detailed information about the Napier Property market please call us on on 06 835-4321.