New Zealand-wide residential property purchases totalled $60.8 billion in the 11 months ended November, up 24.7 percent, or $12.1 billion, from the same months of 2019, according to Real Estate Institute data.
In Auckland, the increased spending was an even higher 40.8 percent at $29.2 billion.
"This year has been an interesting one for the real estate industry" with regional records not seen since October 2003, said institute chief executive Bindi Norwell.
"We are expecting 2021 to see ongoing regional growth as workplaces become more flexible, remote work continues and New Zealanders settle into the 'new normal'," Norwell said.
"This year has certainly highlighted further that we need a consolidated industry and government response to help address housing affordability across NZ," she said.
The increased spending partly reflected increased sales volumes – 75,800 houses were sold in the 11 months, up 6.2 percent on the same 11 months of 2019 despite the seven-week national lockdown between March and May and the Auckland lockdown in August.
But all the growth in volume was in Auckland – outside of Auckland, sales volumes were down 0.9 percent while in Auckland they jumped 23.1 percent.
It's also taking less time to sell a house – nationally, the median number of days it took was down five at 32 days.
Covid-19 and its associated lockdowns did impact the housing market, but not in the way that many people, economists and commentators were initially expecting, Norwell said.
The Reserve Bank's decision to remove loan-to-valuation-ratio restrictions as part of its response to the pandemic was a key factor in invigorating the market, she said.
The RBNZ is proposing to reinstate LVRs on investors from March 1 but the major banks pre-empted this by re-imposing them immediately after the RBNZ's November announcement.
ANZ Bank has gone a step further by requiring investors to have at least a 40 percent deposit, higher than the 30 percent requirement the RBNZ is currently consulting on.
Norwell said low interest rates have also encouraged more investors into the housing market because the returns are better than having money sitting in the bank.
The highest interest rate on term deposits currently offered by the four major banks and Kiwibank is ASB Bank's 1 percent for terms of four and five years.
That means after tax and inflation – 1.4 percent in the year ended September – real returns from term deposits are negative.
Norwell said a lack of supply of properties is also putting pressure on prices in some areas.
Estimates of the housing shortage vary, with Auckland Council saying it needs another 15,000 new homes.
NZ's population has grown 17 percent to more than five million people since 2010 but the national housing stock grew by only 12.5 percent between June 2010 and June 2020.
To keep the ratio of houses to people at 2010 levels, NZ would need another 74,000 homes.
Norwell said fear of missing out – FOMO – is another factor driving prices higher. Her institute's national house price index was 15.3 percent higher in November from a year ago while the index for Auckland jumped 16.2 percent.
She points to one possible reason why New Zealanders are spending more on houses – we would have spent a collective $10 billion on international travel this year had it not been for the covid-related restrictions, so that money has been diverted into other areas, including property.