Where to From Here?

As the weather cooled heading into winter so did the property market but it isn’t all doom and gloom, Nathan Miglani, Managing Director and Head of Lending at NZ Mortgages explains.

As the cost of living continues to increase over winter, and financial pressures build on businesses, property is beginning to see the stirrings of spring, notably at the lower end of the market. While stock levels at the upper are limited, it is a buyers’ market for those looking to enter the property ladder, or seeking an investment property. With houses under $650,000 (the average house price in Christchurch at present) seeing growing enquiry levels.

This has been driven by two factors, the announcement on 1 June to regarding LVR restrictions easing, and an increase to the price cap for Kāinga Ora first home grants to $775,000 for new builds and $575,000 for existing properties.

Prior to this it was incredibly difficult to get pre-approval to purchase if you had less than 20% deposit. The new LVR restrictions combined with bank lending down 30–40% (the biggest drop in decades) has meant we are now seeing more dynamic offers from banks as they try to capture business from those who are borrowing.

With property enquiries up and interest rates levelling out, I believe we are at the bottom of the market and there is only one way for interest rates to go from here, down. Talking to independent, and bank economists, it is likely we will see interest rates starting to drop before the end of the year.

With all of this in mind, our general advice is to fix your mortgage for no more than one year to avoid large break fees in the future. Of course, every borrower’s situation is different, so if your mortgage is up for renewal, or you need to refinance or restructure, please do get in touch. We are here to ensure you are getting the best lending deal for your unique position.