When the summer sun gets a bit hot, we’re eager for the leaves to start changing, signalling autumn. When winter’s grip brings frost, wind and rain, we’re all watching closely for the pink buds of spring.
And in the property world, we’re also operating in a cycle that often takes years to come around again.
I feel as though I’ve come of age as a mortgage adviser, having seen several turns of the clock as property values rise and fall.
There are some changes afoot, and looking at property metrics over the past month or so shows some
interesting trends.
First-time home buyers are returning to the market in large numbers following changes on 1 June that have made it easier to obtain loans with less than a 20% deposit, the relaxation of CCCFA legislation, and properties being offered at lower prices. Enquiry is up over 50%, and many of these buyers are armed with pre-approvals and looking to make competitive offers.
We’re also seeing multi-offers on properties becoming more common again, particularly in the bottom to middle of the market, where buyers aren’t needing to sell a property to make their purchase work. I myself was blown away to receive three offers on a property I had listed. Most of my first home buyers are now finding themselves in competition when putting pen to paper.
Another trend is the supply of properties starting to fall. Very slowly we’re seeing a switch from a flood of properties on the market as vendors make calculated decisions to hold off, and more confidence starts to creep into the minds of investors that political change may be afoot.
Banks are thankfully now starting to loosen lending criteria by tweaking policies in favour of bolstering loan volumes. They have welcomed the changes put in place by the RBNZ in June around LVR (Loan to Value) requirements for investors and first home buyers. I’m predicting these will continue to loosen in the next few months as banks revisit their credit criteria in the face of what looks like a levelling off of interest rates.
The big news of the last month is the likelihood of the RBNZ placing the official cash rate on hold this week (12 July 2023), which they signalled strongly in May. This has built confidence in the minds of borrowers who were hearing numbers of nine per cent thrown around and wondering how they’d service their mortgages. That risk has now largely abated, and we’re hearing stories of battening down the hatches as strong employment conditions continue to keep people in jobs.
And while I like to be the ray of sunshine on an otherwise bleak week of rain and cold, these small glimmers of hope still carry challenges for the buyer, particularly if they are investors looking to leverage equity, or first home buyers on entry-level incomes.
Interest rates are still fairly high compared to several years ago, and it’s important to consider your budget when looking to buy, especially when business confidence is lower, and many are looking to drive efficiencies by reviewing human resources and input costs.
But if you’re in a position to purchase your first home, second home or forever home, or even add to a property portfolio, the conditions may be just perfect.
Get your umbrella out, dance in the puddles and look out on the horizon. It’s faint, but you might catch a glimpse of spring, ready to put forward new life and start the cycle once again.
