RealEstate.co.nz sales and marketing head Vanessa Taylor says the slight drop in property prices in Southland isn’t cause for alarm just yet.
Southland’s run of record average asking prices for residential properties has been interrupted, but it’s too early to tell whether the pause will last, experts say.
Data released by RealEstate.co.nz on Monday shows average asking prices in Southland dropped 34.1 per cent in July, month on month, to $400,944. New listings increased 17.1 per cent on July last year.
This comes off the back of a steady upward trend since May 2019, when the average asking price sat at $344,688.
RealEstate.co.nz spokesperson Vanessa Taylor said that Southland saw a fairly large jump between May and June, from average asking prices of $380,784 to $415,094, and that the dip in July could simply be the market evening itself out.
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“We’ve just come back to a normal number,” she said.
“You can’t talk to trends after just one month.”
However, asking prices were still 7.7 per cent higher than July last year.
Nationally, the average property asking price increased by 3.9 per cent in July to $756,250.
“The question around what’s going to happen is on everyone’s lips,” Taylor said.
Buyers would have a clearer picture of the market by October or November, she said.
Southland Real Estate sales manager for lifestyle and rural Graeme Hegan said it was fairly normal to see a drop in activity in Southland the winter.
“July and August: these are the crunch months.”
The restrictions imposed on the property market during lockdown had created an unusual scenario, “throwing things out of kilter”, he said.
The flood of activity after the restrictions were first lifted had now died down.
“It’s created a bit of a backwash,” he said.
There was still not enough housing to meet the growing demand in the region, and he was still receiving inquiries from buyers outside the region.
Economist Cameron Bagrie said it wasn’t unusual for the property market to take a breath after an upward trend.
“Southland has had one hell of bullish run over the past 18 months,” he said.
He said a drop in housing prices could be indicative of households starting to tighten their belts, but said it was too early to tell whether the situation was a result of Rio Tinto’s decision to close the Tiwai smelter– one of the region’s largest employers.
At this point, Bagrie said it was more likely to see the spill over effects of the battered tourism industry, which had been struggling since New Zealand closed its borders at the start of the Covid-19 outbreak.
The dose of economic reality was that many workers were facing job uncertainty as a result, with significant growth in the number of jobseeker support beneficiaries, he said.
Ministry of Social Development data shows a 4.2 per cent increase in the number of Southlanders using this benefit, compared to July 2019.
Both issues were likely to influence the property market in the coming months, Bagrie said.