As we step into November, the New Zealand property market is seeing a whirlwind of change. NZ Business Connect member and mortgage broker expert Michael Ross outlines the latest updates, exploring the shifting dynamics that are influencing everything from home loan rates to first home buyer activity. Let’s dive into the key trends you need to know about.

RBNZ’s Rate Cuts Means Cheaper Loans but Be Cautious

The Reserve Bank of New Zealand (RBNZ) has slashed the official cash rate (OCR) by 0.75 percentage points in recent months, with further cuts potentially on the horizon. This has created ripples across the lending landscape, particularly in the home loans market.

As Michael Ross points out, “Banks have been quick to reduce mortgage rates, and more cuts may follow, but it’s crucial to keep a realistic outlook.”

Squirrel’s Head of Mortgages, John Bolton, echoed this sentiment, warning borrowers not to compare current rates to the historically low levels seen during the COVID-19 pandemic. “Those were highly unusual times,” Bolton stressed.

Even as rates drop, borrowers should consider the RBNZ’s indication that a ‘neutral’ OCR sits around 3%, signalling that rates will eventually settle higher than those ultra-low levels. Rates around 5%, or even yet with a 4 in front, is a good deal.

Lower interest rates are also increasing consumers’ borrowing capacity, making it easier for people to service larger mortgages. As a result, more buyers may enter the market, potentially putting upward pressure on property prices.

“This is a double-edged sword,” Ross notes. “While lower rates make borrowing more accessible, they also drive demand, which could push prices higher.”

The improved affordability may encourage greater property activity in the coming months, but prospective buyers should plan carefully.

Ross emphasises the importance of financial discipline, “Understand how your borrowing capacity has changed and consider the long-term implications, especially if interest rates fluctuate in the future.”

Falling interest rates have sparked a wave of refinancing, with homeowners eager to take advantage of better deals. Ross points out that major movements in rates often lead to shake-ups in the mortgage market.

“Some lenders have made larger cuts than others, making it an ideal time to review your current home loan,” he says.

Working with a mortgage broker can be crucial in these situations. “As a mortgage broker, I can help you compare options and decide if refinancing is right for you,” Ross advises. “I can provide tailored advice, potentially saving you significant money over the life of your loan.”

First Home Buyers at Record-High Market Share

One bright spot in the property landscape is the strength of the first home buyer (FHB) market. CoreLogic Chief Property Economist Kelvin Davidson highlighted this, stating, “The percentage share of property purchases by FHBs has reached record levels, now sitting at 27%.”

Factors driving this trend include the accessibility of KiwiSaver funds and a strategic willingness to compromise on property types and locations.

Davidson adds, “FHBs are also benefitting from low-deposit lending allowances at the banks, with a notable 80% of these allowances being directed towards them in August.” For aspiring homeowners, the message is clear, make the most of these conditions while they last.

Home Ownership and Healthier Housing Trends

The 2023 Census data revealed a modest uptick in home ownership rates, rising to 66% from 64.5% in 2018. While still below the peak of 73.8% in 1991, this increase marks a positive shift.

Additionally, housing quality is improving, with declines in dampness and mould prevalence across most regions. “Improving housing quality is crucial,” says Michael Ross, “because better living conditions directly impact health and well-being.”

A Buyer’s Market with Flatlining Prices

Entering the warmer months, buyers are finding themselves in a favourable position. Property listings have surged, reaching the highest September total since 2014, while the national median asking price has remained steady for 20 months.

Vanessa Williams of realestate.co.nz observes, “Buyers have plenty of options right now, and with price predictability, both sides of the market are seeing benefits.”

Ross encourages those considering a purchase to act strategically, “This window of opportunity won’t stay open forever. The stability we’re experiencing now offers buyers a chance to enter the market with confidence.”

In summary, the landscape is evolving, and there are opportunities to be seized. Whether you’re looking to refinance, invest, or buy your first home, these trends highlight the importance of staying informed and consulting with industry experts.

As Michael Ross puts it, “Understanding the shifting market conditions can give you the edge needed to make informed property decisions.”

Book an appointment with Michael Ross, your local mortgage broker expert, and discuss how you can take advantage of the current market for your situation today!

Contact Michael Ross

Phone: 027 633 3782

Email: michael.ross@loanmarket.co.nz

Website: adviser.loanmarket.co.nz/michael-ross/about-us/our-team/

Contact Phillip Quay

Phone: 027 458 7724

Email: phillip@mediapa.co.nz

Website: mediapa.co.nz