Property market out of “danger zone” if COVID-19 stays controlled – economist

by Roxanne Libatique07 Aug 2020

The property market is still recovering from the impacts of the lockdown – and it would remain out of the “danger zone” as long as the country could control the second wave of COVID-19, according to independent economist Tony Alexander.

Many economists have released positive forecasts for the market as the country recovers quickly from the lockdown, with OneRoof Property reporting a 0.5% increase in property prices nationally.

In the OneRoof Property Panel, Alexander said the property market would remain outside the “danger zone” if the country would avoid a second lockdown.

“I've been inviting people to remember that New Zealand is a primary-sector-based economy, and the demand for our primary sector products is good. It's holding up well,” Alexander said, as reported by NZ Herald.

“I'm still definitely of an optimistic bent on this. It would have to be, I think, an outbreak in New Zealand and a new lockdown to greatly disturb me from that optimistic scenario.”

Read more: Auckland boasts strongest July sales for five years

Carmen Vicelich, the chief executive officer of Valocity Global, noted the remarkable recovery of the market despite the drop in sales volumes.

“Interestingly, the top of the market is very much ‘wait and see’, so some of the areas like Remuera and Parnell are pretty flat. No one's really selling. We're not seeing home movers,” she said, as reported by NZ Herald.

“Conversely, the bottom end of the market, so first-home buyers and investors are very active, have been the most active in the market, which can drag down the median sales price because the properties that are selling are low value.”

Rupert Gough, the chief executive officer of Mortgage Lab, advised property owners to improve their financial security as the pandemic remains a threat worldwide.

“If you own a house it's about building up that cash buffer through the use of revolving credit or offset accounts so that you've got enough to last if we get a Victoria or Australian scenario,” he said.

“In the old days, they used to tell you to have enough cash to last for three months. I suspect it's more three months plus a lockdown these days. If you can get to that point, then the next worst thing that comes along isn't going to have as much of an effect on you.”

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