The reality is that we cannot do business the same way we were pre-lockdown. There is no doubt that times will be harder. In April, sales have dropped, listings have dropped, and inevitably, median house sale prices will have dropped. There is a very good chance that the market will continue to regress before reaching a plateau, and subsequently establishing a baseline point from which to grow again. Although, when this will happen is difficult to accurately predict. In fact, you never really know where the bottom of the market is until six months after it has happened, when you can step back, reflect, and compare with the benefit of hindsight.
But rather than wading through sales figures and percentages, I want to take a moment to give you my opinion and honest advice. This update is given to the best of my ability, with what I know today, now.
New Zealand is a small country, with a relatively small population, essentially isolated from the rest of the world. Our government acted quickly, and although 4 weeks of lockdown has meant the economy has taken a hit, we are still in a relatively positive position. Like during the Global Financial Crisis (GFC), we have been hurt less because we are smaller and further away.
So what will happen as of next Tuesday? From a Real Estate perspective, you can list your house for sale. Open homes cannot take place; however, property viewings can resume with private inspections (with some limits in place.) You can still sell your home; and the great news for many, is that you will be able to move out of your old home and into your new one! But, I guess the question you really want to know the answer to is, what do I recommend you do?
As we enter Level 3, and more so as we enter Level 2, here’s my take:
If you are looking to buy and sell…
It is likely that your home’s value may have dropped by 5% over the past month; however, you are buying in the same market, so there’s a very good chance the house you are buying has also dropped by the same percentage. Therefore, my recommendation would be that it is a great time to chat to your agent about listing and selling, and definitely make a start on looking for your next home.
If you are looking to buy….
If you are a cash buyer, or you are looking to start or expand your investment portfolio, then this could very well be an excellent time to buy. Rental income has come back a little, but not markedly. Significantly though, the Reserve Bank announced just yesterday that it is planning to remove loan-to-value ratio (LVR) restrictions on their residential mortgage lending for at least a year. The LVR was initially brought in to a very buoyant market, so with the industry now greatly affected by the current crisis, it is incredibly encouraging to see that it will be suspended. This, coupled with record low interest rates, means the opportunities are there and waiting for investors and buyers alike.
If you are looking to sell (and not buy)….
If you can, it may be best to hold off. For some though, this may not be an option, and if you need to sell, then I will work alongside you to maximise the price of your home. It is worth noting at this point that, in Christchurch, the real estate market has seen a steady increase of 30% in median house sale price since the Earthquakes of 2010 and 2011. If there is a 5% drop in the housing market post COVID-19, and you’ve owned your property for 10 years, then, in reality, you haven’t really lost, even if you do have to sell.
But for those of you who are in the position to wait, I will keep you updated, and we will work together to find the best time to market your property. No matter what your situation, we are here to help you.
We have found great ways to work from home over the past few weeks, and we are looking forward to heading back to the office soon – just no visitors allowed yet! Therefore, if you would like to reach out to any one of us to have a chat about your property, or if you have questions we can answer, then you can contact myself or the office anytime.
In the meantime, continue to stay home, stay safe, and stay in touch!
Nathan Najib