The COVID-19 pandemic and various issues have impacted New Zealand’s property market – and the alert level 4 lockdown seems to be the final nail to the coffin as some areas in the country are now at risk from a property downturn in a post-lockdown recession.
CoreLogic’s latest report has ranked Queenstown, Christchurch, Auckland, Dunedin, Palmerston North, and Rotorua as the most vulnerable markets after the lockdown – with Queenstown’s market being the shakiest.
It based its rankings on four risk factors in each area: the contribution of the accommodation & food services sector to each centre’s economy, investors’ share of property purchases, percentage of dwellings listed on Airbnb, and total guest nights due to international visitors.
“Perhaps not surprisingly, Queenstown doesn’t look good on this system, and that supports the popular perception amongst commentators that its property market could be in for some major problems,” said Kelvin Davidson, a senior property economist at CoreLogic.
“Rotorua is another candidate often suggested as being vulnerable, but on our measure, it doesn’t look any worse than some other parts of the country because it’s not entirely dependent on tourism. Other sectors, such as healthcare and professional services, also matter in Rotorua.”
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CoreLogic found that Tauranga, Kapiti Coast, Wellington, Nelson, New Plymouth, and Napier have moderate levels of risk post lockdown. Meanwhile, Hastings, Invercargill, Hamilton, and Whangarei stood out as the most resilient markets.
However, it clarified that its weighing system is subjective, and other factors could still affect each market’s performance over the next few months.
“Some parts of the country, such as Dunedin, entered the lockdown with a tighter listings supply and more momentum in prices than others. This could be a factor in their favour post-lockdown,” Davidson said.
“Housing affordability differs across the country, and this will also play a role in relative performance over the coming months and years. Christchurch, for example, looks more affordable than has been the case for several years, potentially making it more resilient than our rankings imply.”