Buyers and sellers are asking if the coronavirus crisis will affect the Dunedin housing market?

My response is — almost certainly yes. As we come to the end of the first quarter of 2020, the full impact of some of the most dramatic economic events have yet to be felt here. But already the economic impact of Government quarantine requirements and restrictions on travel is showing. The lives and livelihoods of many thousands of people, not only in tourism and hospitality, but across many spheres, will be affected. Perhaps the biggest impact will be a knock to confidence – confidence in the economy generally and a flow-on effect to confidence in the housing market. When that has happened in the past financial activity has slowed, and the housing market has been no exception.

Dunedin has been one of the most buoyant housing markets in the country, with the median sale price rising now to well over $500,000. Factors driving this are likely to remain for some time, however. Among them are:

• A continuing shortfall in the number of properties for sale (still under 300 at time of writing)

• Many first home buyers with Kiwisaver funds ready to invest in a first home

• Historically low interest rates. Low interest rates usually drive housing prices up

• Adding to this was a dramatic drop mid-March in the Official Cash Rate to 0.25%, which will almost certainly mean even lower mortgage rates

• Reserve Bank moves will also mean banks have more capital to lend

• The Dunedin economy remains in buoyant expectancy over the impending new hospital build

No-one knows how long the effects of the coronavirus pandemic will last. Some say don’t expect it to be over in New Zealand by Christmas. That kind of outlook, despite Government efforts to shore up the economy, will likely erode any remaining investment enthusiasm and prompt many to take a cautious approach to their finances.

That might mean that some home-owners will take the opportunity sooner rather than later to cash in on high residential sale prices while the going is relatively good. Certainly, early signs are that many owners have brought forward plans to sell. Investors, too, might look for a dip in prices and play a more prominent role as buyers. Many will know that in times of uncertainty and falling stock markets, property is a safer bet.

Real estate salespeople will be adjusting to the changed environment, not least of all in the interests of health and safety. In some countries, open homes have been banned. Here, I expect buyer visits to fall. Auctions could be banned too.  The Government has now halted gatherings of 100 people or more. It might become more commonplace to show homes via video and to restrict physical inspections to appointment only. Thankfully, we are not at that stage yet, but at the current pace of change, nothing will be a surprise.