As the country and world quickly respond in unprecedented ways to the coronavirus crisis, those watching the property market are watching in kind with uncertainty of the future with experts predicting a fall in house prices and banks dropping mortgage rates in response to the OCR drop.

For now, it seems potential buyers aren’t deterred with continued success in auction rooms in the city.

Here’s what you need to know:

House Prices Expected to Fall, Some Economists

With the impact of a global coronavirus-driven downturn beginning to hit New Zealand, economists expect house prices to fall 3.5 per cent this year – but some say the drop could be nearer 10 per cent as the situation becomes more unpredictable.

ANZ senior economist Liz Kendall stated that “we are going to start seeing house prices fall pretty soon” and that it may not improve gain until the middle of next year, “Sales are expected to move lower alongside prices, as difficult labor market conditions impact on households and investors alike.”

ASB economist have also predicted that house prices to fall to 10 percent, but most economists have agreed that due to the fast-moving pace of the reaction to the virus, it was hard to predict what will happen in the future.

Kendall also suggested the property construction could also be affected by the impending downturn, especially it is reliant on global supply chains, “Projects could be delayed and costs increase, intensifying financial pressures that already exist for some parts of the industry as a result of squeezed profitability, credit constraints and low cash buffers.”

Activity Remains Consistent in Market – For Now

Buyers are still active in the market in the face of the coronavirus. Activity in Barfoot & Thompson’s auction rooms remains remarkably consistent, processing 206 residential properties for sale by auction in Auckland for the week of 9-15 March – that compared to 216 the previous week and 170 the week before that.

At Bayleys, latest commercial property auction it seems that Investors were also not letting up, with sales achieved on 15 of the 24 that were offered, giving a clearance rate of 63%. It was a big auction that was matched with a big turnout of potential buyers.

The Reserve Bank made an emergency Official Cash Rate (OCR) cut to 0.25%, from 1%, in an attempt to maintain the current market in the face of the Covid-19 crisis. The banks responded in kind, with mortgage rate cuts being made across the board with most dropping their floating mortgage rates down to 4.55%.

-Ravi Mehta