Covid 19 coronavirus: What the lockdown means for Whanganui's property market

The lockdown is slowing property sales in Whanganui. Photo / Lewis Gardner

With real estate sales not deemed essential business the turnover is slowing and real estate agents can only guess how Covid-19 measures will affect Whanganui's property market.

Property Brokers Whanganui branch manager Philip Kubiak said his company had good sales in March, but the bottom dropped out completely when lockdown was announced.

Property Brokers' 38 staff are working from home.

Harcourts' Whanganui principal Steve Ellis said usually there would be about 180 houses for sale in Whanganui at this time.

At the moment there are slightly fewer, due to restrictions imposed at alert level 4.

The owner of Bayleys' Whanganui and Ruapehu branches, John Bartley, reckons people in lockdown are a captive audience for listings.

"People are having more time to sit and read and digest than ever. There's digital content, but people still want tangible, local news," he said.

Whanganui's property market has been going through a boom period with the most recent OneRoof data early last month showing quarterly growth of 3.4 per cent and annual growth of 17.3 per cent, raising the median value to $305,000.

Now the lockdown restrictions have put a lot of deals on hold, Harcourts manager Nikki Groves said, with special clauses in agreements allowing for a delay, and settlement dates pushed out until the alert level reduces.

A few sales are still going through remotely. Bayleys has an Australian buyer who wants to put an offer in from across the Tasman. But a lot in real estate relies on actually being there.

Under the lockdown real estate agents cannot meet sellers and appraise their homes, or show homes to buyers, or get them photographed, or hold open homes, or hold public auctions.

Valuers cannot inspect properties, and people cannot move house.

Estate agents are finding digital ways around the restrictions - virtual open homes done by video, virtual auctions held online and digital signing of sale and purchase agreements.

Even virtual appraisals are possible - but Bartley said they were risky and Bayleys would not list a property based on one.

His agents are using the lockdown for online training and keeping in touch with existing clients.

Some sellers are simply waiting until the restrictions end, and Groves said Whanganui people have been patient.

"We're lucky in Whanganui. People have been really good about the delays."

OneRoof editor Owen Vaughan said the current situation and the global financial crisis (GFC) of 2008 were both big, but different, upheavals.

"The GFC was a banking crisis and constrained mortgage finances, whereas Covid-19 is an unprecedented global event that has affected all aspects of life," he said.

Vaughan said home owners could take comfort that the coronavirus had left some things unchanged.

"Many of the underlying fundamentals that support the housing market remain in place: banks funding lines, historically low interest rates and housing shortages within key locations," he said.

But markets with a lot of investor activity could take a hit.

"Markets where there was more speculative behaviour - investors purchasing lower priced stock in large volumes - saw bigger drop-offs in more affordable house sales."

Meanwhile, Ellis said it was anyone's guess how property prices would respond to the changes the pandemic may bring about.

"If I could predict that I would be worth quite a bit."

His guess is that the scarcity of Whanganui properties will maintain their current value.

And he said people from big cities were likely to continue moving to regions.

But prices could drop if the economy suffers, and jobs are lost.

Groves expected a slight downturn, because of the lockdown, but said the market has been buoyant and will probably bounce back.

There could also be a big catch-up in activity once restrictions end.

Kubiak thinks Whanganui prices will hold because Whanganui is so affordable - especially now that interest rates are at an all time low and first home buyers can use their KiwiSaver funds.

It is too early to say what will happen to property values, Bartley said, but there is sure to be change.

Demand for meat and dairy products will increase, he predicts, and rural land will be sought after.

"They reckon if you are in agri you are in a pretty big space."

Some people will want to move their elderly relatives closer to them, some owners will want to downgrade, and others to upgrade. Some businesses will fail, and some people will not be able to afford mortgages.

"I personally believe there might be an increase of listings to come with this," he said.