As we head into another week and a half of Level 2 lockdown in response to the re-emergence of COVID-19, new data from the month of August – half of which was spent at Level 3 – has shown that there has been little to no impact on the property market, in fact, quite the opposite.
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Property Market Shakes off Any Effects from Lockdown, Breaks Records in the Process
According to data from Auckland’s largest real estate agency Barfoot & Thompson, the local property market breezed right through any COVID-19 restrictions, with the number of properties sold up 41% compared to August last year.
The agency sold 1055 residential properties in August, slightly down from the 1095 it sold in July – to be expected from the restrictions of lockdown. But what is most interesting is that it was up 309, or 41%, from the 746 properties the agency sold in August last year.
Barfoot & Thompson Managing Director Peter Thompson commented on the “exceptional” August trading, stating that “Buyer demand was strong and consistent and for the second consecutive month sales numbers for this time of year were at a level last seen at the height of the last property cycle.”
Selling prices also remained firm throughout the month with a median selling of $911,500 in August, up 2% compared to July, and up 10% compared to August last year.
“Sales were strong across all price segments and across all suburbs and districts,” Thompson stated, and addressed that the lockdown had little to no effect on the market “During the first, more restrictive [Level 4] lockdown, the Auckland property market was stopped in its tracks, but in August the market sailed through the latest restrictions.”
The agency also received 1354 new listings in August, which was down 11% compared to July, but up 29% compared to August last year. That left the agency with total stock of 3703 properties available for sale at the end of August, down 4% compared to the end of July, and down just 3% compared to the end of August last year.
Commercial Property Market Holds Steady
Despite the uncertainty around the effects of COIVD-19 on business, Low to mid-priced investment properties were quite popular with investors in the latest batch of commercial property sales reported by Bayleys Real Estate in Auckland. Despite a large portion of these properties being vacant, investors are obviously not shy of acquiring properties that lack a tenant.
A dozen commercial sales were reported in Auckland, with prices ranging from $600,000 for a vacant 106 square metre retail unit in Manurewa, to $6.75 million for a 2372 square metre light industrial building and office on a 4001 square metre site in East Tamaki.
The property was leased to a food processing business and provided a net yield to the new owner of 6.37%.
Of the 12 Auckland sales, five were of vacant properties and the yields on the tenanted properties ranged from 4.41% for a 350 square metre warehouse that was part of a new complex in Onehunga, to 7.55% for a 103 square metre retail unit with two car parks in Newmarket.
With a possible significant move from what the classic “office space” looks like in the future due to many companies adopting to work-from-home to offset any loss from the pandemic, a move to investment in smaller commercial properties could continue to be the trend in the future.
-by Ravi Mehta from Professional Financial Solutions