Do I think the property market will be affected by the crisis?

Yes I do, but the extent of that effect will depend on how long the crisis lasts. If the worst of the impact is over by June or July, then I would only expect there to be a small hit on the market, but if this thing is still with us by Christmas, the consequences are likely to be much more serious.

There’s no question that market activity will be affected over the next few months. Impulse and ‘casual’ house-buying will all but disappear, and even those who need to buy (due to relocation, family size, downsizing, or economic pressure) will still face a more difficult time because they can’t use open homes and auctions as sales tools.

But life will go on, and houses will still change hands.

It’s also worth noting that for house prices to fall, people have to be selling their homes for less than the market previously said they were worth – but sellers will face the same sales process difficulties as buyers, so it’s unlikely we’ll see much change in prices during the crisis. And confidence will quickly return when it’s over, fuelled in part by the historically low interest rates resulting from the Reserve Bank’s recent OCR cut.

It’s also worth noting that the New Zealand housing market has been remarkably resilient over the past 40 years and has only seen three falls in values over that time – with none of those falls getting anywhere near numbers that would be defined as a ‘crash’.

On the flip side, some Kiwis are likely to have mortgage repayment problems as they struggle to make ends meet over the next two or three months, although banks have said that they will deal with these situations responsibly, and it’s unlikely that we will see anyone lose their home in anything other than the most extreme of cases.

In summary – if the crisis is over quickly, there’s no need for panic.

Expect prices to flatten or even take a small negative dip in some parts of the country – then recover over the following 12 months.

But if we’re still dealing with Covid-19 by Christmas? That’s a completely different conversation.

Published 24 March 2020

Ashley Church is a property commentator for OneRoof.co.nz. He’s been a media commentator on property for more than 20 years. Email him at ashley@nzemail.com

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