While predictions for the property market were all doom and gloom six months ago, New Zealand is now seeing a scramble for real estate amid the Covid-19 pandemic and an economic recession.
From first home buyers to multimillion dollar dealmakers, Kiwis are lining up to take advantage of the hot property market - and there aren’t enough houses to meet the soaring demand.
On Auckland’s Paritai Drive, house prices are rising, with one home buyer buying a $1.85 million property without stepping a foot inside.
The situation is the same in the South Auckland suburb of Manurewa.
“I'm quite frustrated. It’s every New Zealander’s dream to own their own property but we are struggling to do it, to be honest,” first home buyer Fua Talafua said.
The Talafuas are currently renting, but are hunting for a three-bedroom house with a backyard for their growing family.
Talafua is a business analyst, while his wife is a flight attendant. The couple also have a newborn, along with a two-year-old son.
“We thought with the Covid situation, the housing market would slow down and the prices would probably stall or go down as well but that's not the case,” Talafua said.
While the country is officially in a recession - caused by a global pandemic and economic instability - Auckland’s housing market is fizzing.
Top economist Tony Alexander said no one had predicted what the situation would look like six months ago.
“I was the least pessimistic economist in New Zealand on the housing market. I still thought prices might fall by about seven per cent,” he said.
While the Talafuas are waiting for listings, Alexander said waiting for prices to drop “has not been a good strategy for the past three decades”.
Real estate agent Graham Wall, who specialises in selling expensive homes, said there aren’t “enough houses to go around at any level”.
“At the lowest level, at the middle level, and at the level where we operate there’s simply not enough stock,” he said. “There’s massive new demand and not enough supply.”
Alexander said the number one factor driving the property market would be the “record-low level of interest rates”, along with the number of properties on the market being down almost 20 per cent from one year ago.
The Reserve Bank’s removal of the loan-to-value ratios (LVRs) have also “encouraged optimism for the first homebuyers”.
“There’s $10 billion we Kiwis were going to spend overseas this year on travel. Well, we’re not spending that and we’re buying houses.”
He said the homes are largely being bought by Kiwis in New Zealand, first home buyers and investors.
The Talafuas are looking to buy in South Auckland, which Talafua said is “a bit more affordable”.
However, real estate agent Charlie Brother said South Auckland "is on fire", with homes in Manurewa selling “quicker than we can list it”.
He said he expected prices there to hit $1 million “maybe in 10 years’ time, but it’s here now”.
“It’s becoming the norm now.”
“Who would have thought buying a property for three-quarters of a million dollars - I would never have thought that in a million years,” Talafua said.
“With that kind of money, I would have thought you would be purchasing a mansion or something.”
It’s the low price of borrowing money which is helping fuel the market, and Alexander doesn’t expect the Reserve Bank to push interest rates “up to any great degree” for several years.
He said while the conditions fueling the market will be here “for the short term”, he also warned people to not get “over-optimistic”.
“Just because the price of a thing rises for a while and surprises us all, doesn't mean we’re gonna continue to be surprised for the next two years. There’s always an end to every cycle.”
For some Kiwis, the dream of owning their own home is getting further and further out of reach.
“If you already own a house, you're getting wealthier. If you don’t, then of course you're not picking up the wealth along the way,” Alexander said.
He said he doesn’t see “a great volume of low-priced accommodation” in the next 50 years, either.
Alexander advised people to buy a house if it will suit their personal circumstances.
“If you have found something that you like - the suburb, the location there, your church, your school, et cetera - then by all means look to make a purchase. But be very wary about jumping in just because you see every man and his dog jumping in as well.”
The Talafuas have since decided to look further for their dream home with a backyard for their kids.
“So we are looking further down Auckland - even going as far as Franklin, Pokeno, Pukekohe - so we really don't want to leave Auckland because Auckland is home to us. The only option is to look further down South Auckland - that's the only option for us at the moment,” Talafua said.
“It’s been frustrating but we're resilient enough to keep searching for that house - the house that we can call home.”