As Auckland property prices continue to rise despite COVID-19 restrictions, experts say the reason is simple: demand is higher than supply.
According to latest CoreLogic sales figures, which include properties sold privately and through real estate agents, the average value of all Auckland residential properties as at August 31 was $1.075 million: an annual increase of 4.7 percent.
Similarly, property listing data from realestate.co.nz shows average asking prices in the Auckland region dropped a mere 0.8 percent in August compared to July, with listings down 7 percent year-on-year.
CoreLogic head of research Nick Goodall said during the second round of COVID-19 alert level 3, he'd seen a huge drop in the number of homeowners requesting appraisals. This indicated a lack of properties coming onto the market.
"Since the start of August lockdown, we've seen agent activity drop by 62 percent nationwide...the majority of this will be from Auckland activity," Goodall said.
Mike Pero, general manager of Mike Pero Real Estate, said coming out of the COVID-19 level 4 lockdown in May, new property listings rose. But since that initial surge, monthly supply was lower than last year.
"There's a shortage of listings because owners don’t feel confident to sell what they have just yet," Pero said.
Although supply has dropped, demand for properties hasn't. According to Goodall, during alert level 3 restrictions, property valuations, which are ordered by banks before a customer puts in an offer, increased 9 percent nationwide.
"This suggests some price pressure will remain as supply remains constrained [and] demand holds firm," Goodall added.
Similarly, Mike Pero Real Estate open home numbers prior to the second round of COVID-19 alert level 3 restrictions indicated plenty of buyers.
"Our agents are experiencing record numbers through open homes each week. As demand remains high, we are witnessing the low listing levels (supply) putting upward pressure on asking prices," Pero said.
As COVID-19 restrictions are eased, buyer demand - and prices - are expected to stay strong as supply struggles to keep up.
"We expect listings to increase under level 2.5, however there may be a slight lag for Auckland due to the pipeline of properties coming to market being stalled due to the lockdown," Goodall said.
But looking ahead, rising unemployment could keep demand, and prices in-check.
"The higher average value in Auckland will ensure a cap on demand as unaffordability remains an issue," Goodall said.
"The real fall-out won’t be known for another 3-4 months as subsidies dry up and businesses close. This will have a dampening effect on the market," Pero added.