Four Questions Every Potential Homebuyer and Investors Should Consider Right Now
Since late January 2024, rolling quarterly charts reveal a notable decline in average property values across New Zealand's major cities. However, recent shifts suggest a turning tide: interest rates are changing direction, and first-home buyers and investors are showing renewed interest, signaling a potential recovery in the housing market.
As a property developer, we constantly monitor market trends to stay ahead. Here’s a recent update on the current property market and four key questions home buyers or investors should ask to help predict future market trend that we hope you’ll find valuable.
*Image sourced from OneRoof article
Is It Easier or Harder to Get Money from the Bank?
Getting a home loan has become somewhat easier recently. The Government's relaxation of CCCFA rules has loosened borrowing restrictions, and servicing test rates have dropped from 8.95% to 8.5%, potentially increasing the loan amount from $500,000 to $570,000. However, the introduction of debt-to-income (DTI) ratios ties borrowing capacity to income multiples, which could complicate lending. The full impact of these ratios will become clearer once servicing test rates decrease to around 7.5%.
Are Interest Rates Going Up or Down?
Higher interest rates have previously restricted buyers, strained homeowners, and affected investors' cashflows. However, the trend is shifting. Recently, major banks have reduced interest rates by one percentage point, with Westpac cutting its 18-month rate seven times this year from 7.19% to 6.15%. ANZ forecasts rates could be just above 5% by June 2025, potentially boosting market demand by attracting more investors and home buyers.
*Image sourced from OneRoof article
Are House Prices Rising or Falling?
House prices hit a low point in May 2023 after a 17.8% drop and began to rise in the latter half of the year. However, growth has slowed, and prices are now declining in many areas. This "sideways" phase of the property cycle, which typically lasts two to two-and-a-half years. The major banks are more “hawkish” towards the market growth in 2025, which will add confidence to the market.
*Image sourced from OneRoof article
Are There More or Fewer Properties Available to Buy?
As of the end of August, there are 38,511 residential properties for sale on OneRoof, a 28.8% increase from last year. New listings for the month totaled 8,443, a slight 0.2% rise from August 2023. However, in Auckland, new listings were down 7.6% year-on-year, indicating that potential vendors are cautious due to high competition and low buyer activity.
For first-home buyers, the increased inventory is advantageous, offering more choices and better negotiation opportunities. Despite this, the broader economic challenges and job redundancies mean the property market isn't without its difficulties. For those who can buy, though, the current conditions are favourable.
*Image sourced from OneRoof article
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Auckland Council’s Plan Change 79 could potentially increase new terrace and row house prices by 20%.
Auckland Council is considering Plan Change 79 to the Auckland Unitary Plan, focusing on the transport network, parking, electric vehicle charging, and pedestrian safety in medium- to high-density housing areas like townhouses.
Impact on 10,000 Homes Per Year
John Dare, a senior engineer, warned that the changes could make townhouses unaffordable, adding regulations that could affect 10,000 homes annually.
Townhouse Prices Could Rise by 20%
New requirements for pedestrian walkways, wider driveways, Mandatory EV, and other facilities could increase townhouse prices by over 20%, especially in back-lot developments.
Mandatory EV Fast-Charging Stations
Townhouses without garages must install fast-charging EV stations, though Dare argues most EV owners prefer home outlets.
Increased Costs for Society
Raised walkways and expanded driveways will raise development costs, impacting affordable housing projects and driving up home prices and rents across Auckland.
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For developers, Plan Change 79 creates additional costs and challenges, making it harder to find viable projects. Fear not, we have fully consented projects approved before the plan change. Projects like these will be highly sought after once the new change comes into effect. Please contact us for more information.
Fully consented projects are rising in value, so don't miss this opportunity!
Click here to check out our current project.
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