The past two years for the housing market will be remembered as a "bizarre period" with measures designed to smooth volatility generating significant ups and downs instead.
Predictions early in the pandemic of significant rises in unemployment and large falls in property values were off track, CoreLogic says. (File image) Photo: RNZ / Cole Eastham-Farrelly
Property research firm CoreLogic said the Covid-19 response, which began just over two years ago, had served up some important lessons for the residential property market.
"It's been a bizarre period for the housing market ever since, with initial predictions of significant rises in unemployment and large falls in property values turning out to be way off track," CoreLogic chief property economist Kelvin Davidson said.
"Indeed, after an initial four to five-month period of housing uncertainty, the policy changes that were aimed at supporting the real economy - e.g. official cash rate cuts, quantitative easing, wage subsidies - also indirectly boosted the property market."
Davidson said five lessons to remember included:
- Apartments tended to lag behind other property types, with smaller value increases than houses and flats during upswings, and sometimes bigger falls in downswings.
- Housing market booms were not necessarily good for many owner occupiers, particularly those looking to trade up to a bigger property.
- Credit availability and cost mattered more to short-term market conditions as opposed to other fundamentals, such as population growth, housing stock changes or net migration.
- Low interest rates had a two-pronged influence on housing - making it cheap to borrow, but also reducing the incentive to hold cash in the bank.
- Housing affordability was useful for making comparisons with the past, and that unaffordability was still the main handbrake for house price growth.