This newsletter is being written in Level 2 and as we head, hopefully, in less than four weeks, to Level 1. (Isn’t it interesting how quickly we have adapted since Covid-19 to so many new terms and restrictions?).
The Dunedin real estate market also appears to have adapted well. While the number of sales, during Level 4 in April, decreased something like 85% and sales consultants were unable to show property other than on-line, there has been a flurry of interest and activity from buyers and vendors since Level 2 began. Before lockdown there was a marked shortage of listings and at the end of March there were just 272. The number of properties coming to the market now has been at least as high as would have been expected without the Covid-19 restrictions. In late May, the number of listings on www.realestate.co.nz in Dunedin had climbed to 353, the first time for a while there have been significantly more than 300. That compares with 346 listings at the same time last year.
Busy agents, like us, have probably seen more listings arrive than in any one month in recent years. We are finding that the lockdown period has given vendors and buyers time to reflect on their situations and finances and they have emerged with a plan. Some vendors were intending to sell anyway, so listing has merely been delayed, which might account for the build-up. We note that it is early days and despite some predictions, we have seen very few vendors selling because of financial hardship.
Uncertainty over buyers returning to the market has been answered unequivocally. Inquiry levels are high, including from overseas and ex-pats. New Zealand could become an even more desirable place for many of them now. Buyers visiting property, although fewer in number, seem focused and ready to offer. Against this trend, one of our agents recently had over 100 groups in total visit four open homes in one afternoon. Most buyers have been pre-approved for finance, though mortgage brokers are advising buyers to check that pre-approval with lenders, especially if their financial circumstances have changed. Generally, we are finding finance conditions are taking slightly longer to confirm as banks experience high workloads, much of it refinancing as interest rates tumble. The historically low level of mortgage rates has been an incentive to buyers as well.
Sale prices seemed to have held so far and it will be interesting to see Dunedin’s median sale price trend over the next few months. In March this year, it was $550,000. Note that in May last year the median sale price was $438,000 and in May 2018 it was just $395,000. So, after a near four and a-half-year period of strong price growth in Dunedin, it will not be surprising, considering the economic uncertainty and an expected delay in the full impact of the Covid-19 crisis, to see that growth checked. There are still many positives for Dunedin – low mortgage rates, the planned new hospital build and a still-strong education-based economy.
The Dunedin market tends not to crash after a period of growth, but to flatten. These are certainly difficult times, “unprecedented” to use an over-used word recently, but my prediction for the next few months at least, is, at worst, a flattening of prices, at least until the Covid-19 dust settles.