SummaryThe NZ housing market has been brushing aside COVID-induced risks since June 2020, observing tremendous revival in the
property prices.Given the emerging scenario, a PEST analysis seems vital to discern the forces driving the property market trends.On the Political front, policymakers’ unprecedented support during COVID-19 storm emerged as a knight in shining armour
for the property space.Looking at Economic trends, low-interest rate environment and unexpectedly lower level of jobless rate enabled the
property market to stay buoyant.Considering Social factors, an uptick in population growth and net migration gain also contributed to the spectacular
property boom in 2020.On the Technology front, emerging digital trends enabled the property market to remain operational and navigate through
the new normal during the pandemic.
The NZ property market
has been grabbing eyeballs for its resilient performance during the COVID-19 crisis. Defying historic recessionary
trends, the property market covered a record-breaking journey, particularly in terms of price upswing.
Given the emerging scenario, a PEST analysis seems vital to discern the forces driving the property market trends.
The NZ housing market has been brushing aside COVID-induced risks since June 2020, observing tremendous revival in the
property prices. The Real Estate Institute of New Zealand’s (REINZ) House Price Index marked an uptick of 6.2 per cent
in the September quarter, reflecting the highest percentage surge in 201 months.
Moreover, the REINZ House Price Index grew by 11.1 per cent annually in September, surpassing 3,100 mark for the first
time ever. Surprisingly, over half of the total Kiwi regions spotted record median prices in September, as did nineteen
With property market logging astonishing recovery from the virus crisis, a PEST analysis sketching the landscape of this
resurrection demands closer attention.Political
Policymakers’ unprecedented support during the COVID-19 storm emerged as a knight in shining armour for the NZ property
The Government’s mortgage deferral scheme unveiled in March 2020 enabled banks to suspend or reduce mortgage repayments
of customers for up to 6 months. The move helped to ease the debt burden of consumers while acting as a stabilising
force against strained property sales. Recently, the Government extended the mortgage holiday scheme for another six
months, up till 31 March 2020.
Besides six-month mortgage freeze, the Government’s wage subsidy scheme enabled realtors and property owners to stay
afloat during the virus turmoil.
In addition to these Government support programs, the removal of Loan-to-Value Ratio (LVR) restrictions by the Central
Bank lent a helping hand to the property market’s recovery. In May 2020, the Central Bank removed LVR restrictions on
mortgage lending, encouraging prospective first home buyers to enter into the property market.Economic
Low-interest rate environment and unexpectedly lower level of jobless rate enabled the NZ property market to stay
buoyant during the virus crisis.
The Central Bank slashed the Official Cash Rate in Kiwi Land to 0.25 per cent in March 2020, significantly reducing the
cost of mortgages. The record low level of cash rate enabled investors and first-home buyers to compete favourably for
the limited property stock, pushing the house prices higher.
Additionally, preferably better state of the NZ labour market diminished the number of new listings and involuntary
property sales amidst COVID-19. Kiwi Land surprisingly observed a dip in the unemployment rate from 4.2 per cent to 4
per cent in June 2020 quarter.
However, speculations are rife of a sizeable jump in the jobless rate during the September quarter, which may turn the
tables for the housing market.Social
In addition to these factors, an uptick in population growth and net migration gain appears to have contributed to the
spectacular property boom in 2020.
Stats NZ’s latest statistics reveal that the nation experienced population growth in all the 16 regions over the year
ended June 2020. Kiwi Land witnessed a national average growth of 2.1 per cent in population, with Bay of Plenty
contributing the highest percentage growth. The increase in population growth rate seems to have driven the demand for
property in the NZ market, keeping the prices elevated.
Moreover, Stats NZ noted a net migration gain of approximately 16,900 Kiwi Land citizens in the year ended June 2020.
Prevailing overseas travel restrictions and evolving safe-haven status of NZ in battling the global pandemic seem to
have stimulated the trend.Technological
Paradigm shifts in technology enabled the NZ property market to remain operational and navigate through the new normal
during the COVID-19 pandemic.
The NZ housing market resorted to online property listings amid coronavirus lockdowns, bridging the gap between
prospective buyers and their desired homes. NZ’s online listing agency realestate.co.nz witnessed a Y-o-Y increase of 12
per cent in the property listings during September 2020 in the digital-friendly landscape.
Furthermore, NZ proptech segment galvanised significant attention for managing commercial and residential property
transactions during lockdowns. Tapping COVID-induced opportunities, proptech company Valocity introduced a user-friendly
application in shutdowns. The application enabled a property occupier to take and share reliable photos with the valuer,
eliminating the need for physical onsite inspection.
The property market has so far been defying recessionary concerns and moving against the gravity. However, the real test
will punch the clock with eventual termination of mortgage deferral and wage subsidy schemes. Besides, a potential surge
in the unemployment level can change the course for the thriving market, deteriorating the demand for properties.