Southland’s residential house prices and sales volumes have held up well under the pressure of the post-COVID recession, but things could change, real estate market and economics commentators say.

The latest Real Estate Institute of New Zealand (REINZ) data for June reveals Southland house prices and the volume of sales rose in June, in line with national trends and in defiance of post-COVID lockdown predictions.

REINZ statistics show Southland’s median house price in June was $340,000, up 19.8%, while median house prices across New Zealand increased by 9.2% in June to $639,000, up from $585,000 in June 2019 and up from $620,000 (3.1%) in May 2020.

The key regional points for Southland are:

• 27.7% increase in the numbers of houses sold from Jun 2019 to Jun 2020. There were 155 houses sold in June 2019, compared to 198 houses sold last month.

• Increase in median house prices by 19.8% from Jun 2019 to Jun 2020; up from $283,750 to $340,000.

• It takes four days longer to sell a house, from 29 days in Jun 2019 to 33 days in Jun 2020.

• A REINZ House Price Index level of 3415 for Southland. This means the value of the region’s house market has increased by more than 240% since 2003. The region experienced a 0.7% increase in the month-on-month value of the housing market. 

• The region’s top sale was for $1.7 million in Strathern.

June marks 105 months in a row of year-on-year median prices increases for the country.

However, in Southland, there are now widely held concerns the Tiwai Point smelter closure in August next year could force many families to leave the district to find other work.

Infometrics senior economist Nick Brunsdon told the Southland App this week the smelter closure could bring permanent change for many residents, and more house sales were possible as people responded and adjusted to the Tiwai decision.

However, decisions to sell and move could also be influenced by the prices people were willing to pay for a house. That could result in holding some people in Southland, Mr Brunsdon said.

Real Estate Institute of New Zealand chief executive Bindi Norwell said there were predictions earlier this year that house prices would fall post-COVID but so far, there is no evidence that has happened.

She warned that a post-lockdown peak could be followed by a trough.

“With wage subsidies and mortgage ‘holidays’ still firmly in place, and demand for good property exceeding supply, we wouldn’t be so bold as to say there won’t be an easing of pricing in the coming months when these support mechanisms come to an end. 

“But right now, Kiwis’ love affair with property continues unabated – especially with the low interest rates we currently have in the market,” Ms Norwell said.

The volume of Southland house sales in June was the best in 13 years, according to REINZ. PHOTO: Lucy Henry

She said investors had also been exploring the Southland market, likely attracted by low interest rates.

"The [Southland] market has been particularly busy this month with approximately 50% more attendees at open homes compared to last month.

"New listings also increased significantly by 59.0%, the highest increase across all regions . . . It will be interesting to see how the market will react in the coming months as we near election time," Ms Norwell said.

The top four regions with largest increase in annual sales volumes during June were West Coast (up 55%), Southland (up 27.7%), Taranaki (up 19.7%) and Waikato (14%).

Ms Norwell said sales volumes suggested the country had put the impact of lockdown behind them and people had got on with their sales and purchasing decisions.

Many of the thousands of returning New Zealanders were looking to purchase property, which was likely to have bolstered June’s sales volumes, she said.

“However, we’ve said it before, and it’s important to say it again, that this may well be a post-lockdown peak in activity levels. There are concerns that with the wage subsidies, mortgage holidays ending and an election in September, that there may be a potential trough in activity levels in the coming months,” Ms Norwell said.