Covid-19 and the Goldilocks Effect
As New Zealand settles back into Level One, and Auckland into Level Two, we're discovering subsequent lockdowns appear to have less of an effect on new listings and consumer confidence.
Property listings across New Zealand experienced an immediate rebound from Level 4 between April and May, quickly climbing beyond 2019 levels, only dropping back when Level 3 and 2 were reintroduced on August 12.
This data echoes what we see around the world, or what I like to call the Goldilocks Effect: the US, NZ and Sweden all had different approaches to Lockdown.
The US had the most severe, and their market is still recovering. NZ had a more moderate approach, and our property market is responding better than expected. In Sweden – where they didn't implement any lockdown – there's been very little change.
What's happening around NZ?
During Level 3 (between July and August) Auckland saw around 240 fewer property listings. Central North Island, West Coast, Marlborough, and Bay of Plenty also saw a decline in listings during Level Two.
Inventory in these regions is certainly constrained, but it's not quite the property armageddon sometimes portrayed in the media.
The national drop in new listing volumes was driven by the country's largest market, Auckland. However, looking at only Auckland reveals a less severe impact than one might expect. The drop in new listings is noticeable but marginal, and new listings are still higher than the same time last year.
Canterbury's listings climbed by around 130 with Wellington and the Wairarapa performing strongly. All other regions also reported strong growth.
New Zealand's Covid-19 rollercoaster highlights several lessons that apply to global markets:
1. As the pandemic continues around the world, the evidence from New Zealand suggests that the worst for the property market may be over (at least in terms of new listings and inventory).
2. Subsequent lockdowns appear to have less of an effect, with a targeted approach yielding the best results.
3. If authorities can implement lockdowns in a targeted, focused way, the effect on the real estate market is significantly reduced.