The reemergence of Covid-19 in New Zealand, along with new lockdowns, provides further examples of its effect on the property market. As a case study for markets around the world, the results highlight less severe outcomes the second time around.

Another Drop in New Listings

New Zealand's recent lockdowns, which began on August 12th, affected the country in a similar, but less dramatic, fashion than the strict lockdowns earlier in the year. The level 4 April lockdowns were a total shutdown, which saw new listing volumes drop 85 percent. The most recent level 2 & 3 lockdowns are less severe, with a much smaller drop in new listings.

Both lockdowns saw a return to the same behaviour: a drop in new listing volumes. But the effects are wildly different, and tightly correlated to the severity of lockdown.

The monthly change in new listing volumes was most pronounced in Auckland, which was under a strict level 3 lockdown. At level 2, the rest of the country was fundamentally unaffected.

The national drop in new listing volumes was driven by the country's largest market, Auckland. However, looking at only Auckland reveals a less severe impact than one might expect. The drop in new listings is noticeable, but marginal, and new listings are still higher than the same time last year.

With buyer demand remaining strong, the natural result is a drop in inventory. But similar to new listings, it is not as severe as one might expect: A small decline, rather than plummeting inventory levels.

Inventory is certainly constrained, but it's not quite the property armageddon that is sometimes portrayed in the media.

Strategic Takeaways for International Markets

New Zealand's Covid rollercoaster highlights several lessons that can be applied to markets around the world:

• Subsequent lockdowns appear to have less of an effect on consumer confidence in bringing a home to market. There is less overall impact on new listing volumes.

• The more severe the lockdown, the larger the drop in new listing volumes. However, the severity is not linear; the strictest lockdowns have an exponentially greater impact on the market (Auckland's level 4 lockdown saw a monthly decline in new listings of 46 percent, compared to a monthly decline of 7 percent during the August level 3 lockdown).

• If authorities can implement lockdowns in a targeted, focused way, the effect on the real estate market is significantly lessened. 

As the pandemic continues around the world, the evidence from New Zealand suggests that the worst for the property market may be over (at least in terms of new listings and inventory). Subsequent lockdowns appear to have less of an effect, with a targeted approach yielding the best results.