First-home buyers come out to play as prices remain flat.
First-home buyers come out to play as prices remain flat.
Since the market peak of late 2016, house prices in Auckland have remained incredibly steady. This has allowed first-time buyers to take a deep breath and save up their deposits – finally, they can catch up with value gains. Between 2011 and 2015, it was impossible to save as fast as prices were rising, so this has been a welcome change.
Steady prices have been underpinned by an equally stable official cash rate (OCR). It remains at a historic low of 1.75%. The Reserve Bank is saying it will move the OCR at some point, in some direction. That’s about as helpful as it sounds – but at least it’s an honest assessment of the situation. There’s been a lot of press recently about impending mortgage rate rises, lenders have been dropping their rates slightly across the board. With mortgage rates so low since about 2011, predicting a rise is always a safe bet and people have been forecasting increases regularly for the last five years. I’m not making a prediction here; it’s safe to say they’ll eventually go up, but there’s no way to know when that will happen or how long it might last for.
For first-time buyers, this flat market has been fantastic and the forecast is that it will continue for this year at least. A report by Property Institute of NZ and MyValocity has found that first-home buyers account for 29% of new mortgage lending, far greater than the 16% share accounted for by investors. Saving for a first home is easier now than it has been in perhaps 10 years, so it’s worth tightening up your purse strings over winter if you’re considering buying a first house in 2018.
Investors wary as regulations put the squeeze on – yet fundamentals still strong.
It’s a good time to be a first-home buyer but a bad time to be an investor wanting to leverage. Government regulations have been targeting property investors for five years since the LVR restrictionswere introduced. The nationwide 40% deposit required for investors came into play as the market peaked, and though it’s since been dropped to 35%, that remains a hefty deposit for aspiring investors.
Add to that the prospect of tax ring-fencing, alongside the new standards for rental properties, extended brightline test and the likely introduction of a capital gains tax? Regulators have taken aim at investors and investors are ducking out of the way. While experienced landlords have enough equity (and usually positive cashflow) not to be too worried, anyone who bought a rental in the past few years or is looking to get into the market is right to be nervous. (ANZ’s recent Property Focus has some good analysis on this.) Until we have some certainty around these issues it’s hard to accurately crunch the numbers on a prospective rental purchase.
Yet investing in property still seems like a good idea when the fundamentals are solid. Despite a drop in immigration numbers, Auckland in particular has too few houses for its occupants and there seems to be a shortage of rental properties in many regions – and of course interest rates are low. If you can afford to invest in property, I really believe it’s a wonderful way to leverage your money, even with all the new restrictions.
Ready to buy? It’s smooth sailing.
Preapprovals are working beautifully right now – better than they’ve worked for years. Because prices aren’t budging, my clients are able to get a good handle on their local market and know exactly how much they can spend and what it will buy. That’s making buying plain sailing at present, leading to plenty of happy homeowners.
Refinancing is another massive driver of lending, the major lending category in Auckland and a superb way to shop around for a sharp deal.
And we do have sharp deals at the moment: With negotiation and leverage, we are currently achieving rates that sit just above the lowest rates on record. ASB and ANZ have both dropped their rates – remember I can always match or outdo the rate you get directly from your bank. Not only am I getting better rates for my clients but also better terms. Right now, some lenders are starting to baulk at interest-only extensions, I’ve been able to find other lenders to take these on, resulting in more happy customers. In fact, SuperCity saw close to a new record numbers of transactions in June, which was a nice surprise with winter typically a bit quieter.
Another surprise from the lenders has been BNZ’s new policy of considering historic Airbnb income. This is a long-overdue move and I’m hoping other lenders will follow suit. All in all, lenders have been updating their policies so often, it is no wonder why we are so busy because there is no way Joe Public could understand what bank’s policy caters best for their specific needs. If you or someone you know is considering buying, refinancing, renovating or investing, give me a call and I can help secure the best possible terms and rates.
We’ve maintained an outstanding 100% claims paid record because we put our clients first and we don’t cut corners.
Which means we really help our clients “prepare for winter” and build certainty for uncertain times. We love what we do and that’s why where there for you not just at the beginning but all the way through to claim and beyond.
SuperCity Insurance Claims Facts:
the average age of claimants – 37
over $2.7M in claims paid
most common condition claimed on Cancer
other claims include back injuries, head trauma, cardiac arrest, debilitating stress & anxiety, multiple medical surgeries and diagnostics
over $769,313 in Trauma cover, Income Protection & Life cover paid to one client who was diagnosed with cancer – claims helped cover medical treatment costs, mortgage & living costs so they could spend time together before he passed away
one client cover had been in place for only 4 months before he had a cardiac arrest whilst biking and sustained a major head injury – Trauma & Income Protection claims paid over $425,386.54 (still on claim) This is covering his medical & rehabilitation costs and mortgage & living costs whilst he focuses on recovering
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