With the weather warming, it feels like summer is around the corner. But unfortunately, the property sector still isn’t really seeing the sunshine.

Most of the banks are currently in a happy spot, with BNZ, Westpac, ASB and ANZ all reporting record profits, but homeowners and those looking to buy still won’t be all that happy.

So let’s have a look at what’s happening in the sector this month.

It’s Actually A Reasonably Good Time To Be A Home Buyer

The latest QV House Price Index shows average house prices are down more than $100,000 over the course of this year. And in Auckland and Wellington, that drop is closer to $200,000. Figures are declining in every region except Queenstown-Lakes which is bucking the trend. [source]

Spring usually brings a bump in the market, but the values don’t seem to be reflecting that this spring. There has been an increase in the number of properties on the market though. 

So what does that mean for buyers?

Well, the main thing is that it means more choice, and that opens the door for price negotiation. QV Chief Operating Office David Nagel said purchasers have “plenty of choice and the upper hand when it comes time to negotiate”. This is important given that mortgage rates are still high, because it means buyers might get a better price and need a smaller loan.

If you are considering buying a home, it is best to get advice from a mortgage expert like the team here at Mortgage Suite. That way we can explore your individual needs and affordability options.

But Not Necessarily For First-Time Home Buyers

Interest.co. nz’s Home Loan Affordability Reports show that it has got progressively harder to be a first-time buyer over the last few years. Comparisons between 2019 and 2022 show that it takes people longer to save up the required deposit and that mortgage repayments now take a larger chunk out of take-home pay. This is mainly a combination of higher mortgage rates and wages not keeping up with the rises. 

So while first home buyers may be benefiting a little from the increased choice in the market, higher mortgage rates offset this benefit somewhat. But, it’s not all bad news. It simply means as a first home buyer, you need to be clever about the mortgage you take out and potentially try to save more for a deposit if you can.

If you are looking to get on the property ladder, the best place to start is by discussing your options with a mortgage broker. We can look at your current financial situation and explore a wide range of mortgage options for you.

Are You Planning To Build Or Develop?

While house prices are falling and the market is sluggish, the number of new homes being consented doesn’t seem to be in the same slump. In fact up to September 2022, Statistics NZ reports that more than 50,000 dwellings have been consented, up just over seven per cent on the same time last year. Standalone homes were the biggest number but townhouse consents are up as are retirement village units. [source]

The Sector Trends Report from the Ministry of Business, Innovation and Employment (MBIE) does, however show that the building process is getting longer and the cost of building is getting more expensive. [source]

If you are planning to build, the finance you need may differ from a traditional mortgage. Get in touch to talk through what the best way to finance your project would be. We can work with you to look at development funding from either a bank or a private lender.

Is It Time To Check Your Insurance?

If you’ve bought a property or if you already own one, then a new report from CoreLogic suggests it might pay to check your insurance policy. Why? Because, this survey found that about a third of respondents weren’t sure whether they had their property insured for enough.

Many insurers are now employing a sum insured policy which means they will only pay out as much as the owner has stated the home is worth. Given the rocketing costs of building materials and labour shortages potentially pushing up labour costs too, the cost of rebuilding or replacing a house now is much more than it used to be. It’s worth checking your cover just in case.

What About Mortgage Rates?

It wouldn’t be a Mortgage Suite newsletter update if we didn’t give a quick mention of what mortgage rates are doing!

You have probably heard that the Reserve Bank has again upped the OCR to 3.5% in an attempt to halt unprecedented inflation. That will mean more increases to mortgage rates in the near future.

If you have a fixed rate coming up for renewal soon, it is really important to have a discussion with an experienced mortgage broker about your options. Get in touch with our team today for a no-obligation chat.