It sems that 2020 will be ending with some welcomed news after a tumultuous year, as the housing market continued to soar in November, breaking some all-time records. The good news continued to come in with the construction sector having fully recovered from the effects of COVID in the third quarter.
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It seems that the summer sizzle on the housing market came early this year, with Auckland’s largest real estate agency Barfoot & Thompson selling 1551 residential properties in November, which was the highest number of properties the agency has ever sold in the month of November and the highest in any month of the year since March 2015.
Record heights continued to be recorded with the average selling price of $1,055,971 and the median selling price of $974,000. New listings also poured into the agency’s offices, with 2335 new listings received in November which was the highest number of new listings the agency has ever received in a single month.
Barfoot & Thompson managing director Peter Thompson stated that “The market is as busy now as it was at the height of the last major buying cycle between 2013 and 2016,” and expected this trend to continue “through to the Christmas/New year break.”
Economist from Westpac also think this trend will continue well into the new year, stating in their in their latest Home Truths newsletter, “All of the usual indicator dials are now redlining, indicating ongoing rapid house price inflation for at least the coming few months.”
The economists put this trend solely down to low interest rates, and expected them to rise in the new year and cool off the market, “we are forecasting significant increases in fixed mortgage rates from 2022 onwards, If that is correct, then rising interest rates will eventually cool the market.”
Construction Sector Recovers from COVID
Construction activity appears to have fully recovered from the effects of the COVID lockdowns earlier this year, with $6.681 billion worth of building work started in the third quarter of this year, up 2.4% compared to the same quarter of last year.
That follows declines of 23.0% in the second quarter, and 2.3% in the first quarter compared to the same quarters of last year. New residential building work totalled $3.789 billion in the third quarter of this year, an all-time high and up 8.7% compared to the same period of last year.
However non-residential work, which includes commercial premises such as shops and offices and non-commercial buildings such as hospitals and schools, was down 4.9% compared to the third quarter of last year.
Growth in new building work was strongest in Wellington where it was up 15.3% in the third quarter of this year compared to a year earlier, followed by Waikato where it rose 12.6%. Activity in Auckland was unchanged from a year earlier and in Canterbury it was down 4.6%
-by Ravi Mehta from Professional Financial Solutions