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Evidence mounts for NZ property market rebound

There is growing evidence of a strong bounce-back in the residential property market, according to CoreLogic.

Thursday, November 26th 2020, 1:35PM 1 Comment

It says profit-making resales of houses have increased nationally to 96.8%. On a median national resale basis that is a gain of $229,000.
These figures are up from $220,000 nationally in the second quarter of 2020, and not far short of record peak of $233,000 at the start of the year.

Median resale loss, or ‘pain’, also improved the latest quarter, from $22,500 to $20,000. That was the smallest median resale loss in two years.

CoreLogic’s Pain and Gain Report, compares resales to the original purchase price.  The national trend of strong property ‘gain’ and minimal ‘pain’ was replicated in most of the main centres, consistent with the broad rebound CoreLogic has also seen for sales activity and property values.

In Hamilton and Wellington, about 99% resales in the latest quarter were made above the original purchase price, with Tauranga and Dunedin at 98%. Auckland and Christchurch also showed improvements in the third quarter.

Auckland’s share of property resales made for a gross profit rose slightly from 94.6% in quarter two to 95%, while Christchurch rose from 90.9% to 92.4%.
CoreLogic Senior Property Economist, Kelvin Davidson, says “This report really confirms what we know is going on in the housing market more generally. Prices have rebounded strongly from Covid-19 and are continuing the upwards trend they had before the pandemic hit.”

“Overall, it’s been remarkable how quickly the sentiment in the property market has turned from pessimism back in April and May to more confidence now. Low mortgage rates and the tight supply/demand balance are feeding into renewed growth in property values that we’re seeing in our resales data.

“There’s also no evidence that any particular part of the country is really suffering. The lack of any real regional variation highlights that things are pretty strong across the country.”

Houses made the biggest gains with 97.3% of house resales made at a gross profit which is pretty much as high as that figure has been since mid to late 2007, he says.

For apartments, 86.1% of resales were made above the original purchase price.

Davidson predicts this positive trend will continue in the final quarter of 2020.

“On the back of low mortgage rates, I expect to see further growth in house prices and buyers competing for limited stock. Any resellers will likely have good demand, and some could continue to see multiple offers for their property, and sell for a solid gain.

“However, if we see unemployment rise in the fourth quarter led by the absence of inbound overseas tourism over Summer, landlords might have a higher risk of vacancy in rental properties. If this flows through to investment property resales, investor property performance could slip a little. It’s unlikely to be major, but something to keep an eye on,” Davidson said.

Tags: CoreLogic

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Comments from our readers

On 26 November 2020 at 11:55 pm Michael Donovan said:
Huh.....if Blue Chip were correct in their claim that houses (on average) double in value every 10 years, that equates (on my calculator) to approximately a 7% pa (compounding).
So if we are told that house prices rose about 20% during the last year, and are projected to rise "only" 15% in the year forward, plus that these rises have been occurring for some years, would that signal to any normal person that the market is calculated as so hugely overheated....that a severe correction (crash) would be imminent?

I agree, that no-one can normally pick the day of a crash, or vice versa.
However, I would pick that sometime soon after the re-scheduled June WEF meeting would be a logical time for the big drop.......now, I've put that into print...forever!

Reserve Bank Act BROKEN?
NOTE: Don Brash mentioned a fact in his 1998 speech in Hamilton, being that "houses & land" had been conveniently removed from the CPI
Someone said;...... "if the RBA is set in law that inflation is not to rise above 3%pa, that above fact must be proof that laws are made to be broken, and that the relevant potential perpetrators can also be the ultimate fraudsters and manipulators are able to "adjust" appropriate things to give the common people the "perception" that any law (Act) has not been broken?"

Obviously, this means that if 'they' had not removed houses & land from the CPI, then the Act (law) would have been seriously breached (broken)?

If anyone chooses to work 'backwards' from the known facts, this results in the seemingly evasive solutions to things such as "runaway house prices" much easier solutions to think of and then apply??

Then again, we must remember that all those "second-tier" government departments (councils) need lots of revenue to be able to waste on failed projects, and rates provide huge revenues....particularly when those rates are attached alongside rising house prices.
It seems obvious that those "high-up" people actually 'wants' house prices to rise ever so strongly....because higher house prices results in higher rates!!!
Ahhhh....now I get it
An ultimate gravy train??

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AIA 4.55 2.29 2.59 2.65
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
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BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
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CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.40 3.50 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 2.25 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential - - - -
Resimac 3.39 3.35 2.99 3.35
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SBS Bank 4.54 2.79 ▲2.99 ▲3.29
SBS Bank Special - 2.29 ▲2.49 ▲2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
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Westpac Special - 2.29 2.69 2.79
Median 4.55 2.73 2.99 2.80

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