Who would have thought, this time last year when we were still reeling from COVID lockdowns and the threat of the pandemic completely decimating the world, that the Australian and New Zealand property markets would rebound to 13.5% growth and 22.8% growth for the financial year respectively 😳. Nobody in their right mind could have predicted this. However, when you break it down and understand the reasons:
- government incentives
- mortgage holidays
- ex-pats coming home looking for a safe haven
- realisations that certain people now cannot live together
- and many more
It is not that unbelievable after all.
Let’s have a closer look
The Australian property market, although showing substantial growth, is looking to be reasonably sustainable with key indicators showing the market is starting to normalise, avoiding government intervention to slow it down. The forecast interest rate hike is more likely to happen sooner rather than later with fears of mortgage increases slowing the market occurring as a result. Smaller capital cities are having the biggest growth due to coming off a low base with Darwin leading the charge showing 21% growth, Hobart next with 19.6, and Canberra seeing 18.1% growth. Then we have Sydney with 15%, Adelaide with 13.9, Brisbane with 13.2%, Perth with 9.8%, and Melbourne rounding it out with 7.7% obviously due to their consistent lockdowns and restrictions they have had to endure.
Listing volume has been strong, with a combination of past distressed sellers and speculators trying to seize the market while the sale prices are hot. Covid also brought about a good reason to follow through with changes in lifestyles and realisations that their current living arrangements needed to change. Investors who were affected financially have also added to the listing frenzy. Luckily, the demand based on the above reasons has snapped up most of the excess stock, causing high sales volumes as well as price hikes. The perfect storm for real estate agents.
The rental market has also been an unusual one to pick. This is due to circumstances such as government intervention with mandates avoiding eviction and selling in order to keep distressed tenants with a roof over their heads, which is fair enough. Although, yields have bounced back strongly with 6.6% growth nationally, which is the highest since 2009. Darwin leads again with 21.8% and Perth with 16.7% growth. The same cannot be said for Sydney and Melbourne who rely on students and travellers that are being kept away from Australia due to travel restrictions.
The New Zealand property market has been out of control, resulting in government intervention taking place to slow growth and deter speculator investors from driving the prices up unnecessarily. The introduction of a minimum 40% deposit for investors helped beat the curve and it is certainly working with bank valuation for residential properties declining quickly. However, looking back, it has been an incredible year with Wellington having 30.8% growth leading the charge, Hamilton with 27.7% growth, and Auckland being the lowest growth rate with 18.6% growth.
What is really staggering is the average property prices are led by Auckland with $1,283,895 😳 followed by Wellington with $1,024,649 and the lowest of all main cities being Christchurch being just $631,114.
All in all, amidst one of the most incredible epidemics in history, we have seen a property BOOM. Just goes to show that nothing is forever and that you need to get used to change because it will happen more frequently than ever before. Who knows what the next financial year will bring? All I can say is, I wish you all the very best for it.