The Reserves Bank’s recent announcement to maintain the OCR at 0.25% is to support employment and provide economic stimulus following the pandemic. Loan restrictions have been relaxed in order to provide further support to the housing market. Although fixed interest rates continue to be at historically low levels, trading banks have been showing caution, especially towards land development.
New Zealand now has a closed border policy, although a significant number of New Zealanders have repatriated as a result of the pandemic. The immigration and tourism sectors are significantly affected with flow-on effects expected throughout other sectors of the economy. Recent government announcements regarding economic stimulus by way of business support coupled with infrastructure spending, should help underpin employment and economic activity.
The residential property market in and around the Bay of Plenty area did slow following the high activity periods of 2016/2017 which showed strong value increases and short selling periods. Early 2019 was somewhat subdued with property values appearing to have levelled off and sale volumes decreasing. Late 2019 / Early 2020 saw an increase in activity with agencies reporting a lack of listings with some properties receiving multi offers. Post Covid-19/late 2020, sales activity has been surprisingly strong with demand outstripping supply.
Main drivers of the housing market:
- Low interest rates with the expectation that they will remain at low levels for the short to medium term.
- Changing of the LVR rules being introduced by lending institutions.
- A shortage of stock / listings.