What are the Current Property Market Trends in NZ?

Property prices in New Zealand are dropping fast in value at levels unseen since the global financial crisis. At the same time, many buyers remain locked out of the market due to rising interest rates and cost of living pressures. At Mortgage Masters, we carefully follow property market trends in New Zealand and can help find a home loan Auckland buyers are eligible for, whether as a first home buyer or investor.

Why are Property Prices Falling?

In total, the NZ property market fell 7.7% between the price peak in November 2021 and May 2022 according to the REINZ House Price Index. These drops can be at least partially attributed to the massive growth seen over the pandemic, spurred on by government policy to deter a market crash. In 18 months from May 2020 to November 2021, the NZ property market rose 45.6%.

This reversal in house prices is a result of the Reserve Bank adopting aggressive policy tightening to dampen demand and curb inflation, with further price drops predicted. The Official Cash Rate is at 3% as of September 2022 with more rises being signaled to come.

What Does This Mean for Buying Property?

While getting on the property ladder remains difficult for first home buyers, lower property prices bode well for investors with a lot of capital looking to grow their portfolio. Ensure you factor in the higher interest rates and deposit requirements for investment mortgages, which add to your debt servicing costs. Keep in mind home loan requirements NZ property buyers are subject to can also change during rate hikes.

While some property investors are concerned falling home prices are eroding household wealth, remember that annual house price growth is still positive. Rents across New Zealand also continue to experience substantial year-on-year growth, meaning yields remain high for property investors.

Impact on Current Homeowners with Mortgages

The most common home loan Auckland Kiwis currently have is a fixed rate mortgage of two years or less. This means many homeowners are paying low interest rates from the pandemic period and are yet to be impacted by the Reserve Bank’s aggressive tightening of monetary policy. When these cheaper fixed rate mortgage terms begin to expire, current homeowners will face higher, potentially doubled, mortgage rates.

This will have a truly significant impact that will send ripples across the economy. For example, through a sharp contraction in consumer spending and potential selling of homes people can no longer afford. Homeowners worried about their current mortgage should speak to an independent mortgage broker for advice on refinancing to help curb some of the potential impacts of higher rates. This includes people with commercial property, who can seek advice from a specialist commercial mortgage broker.

Free Consultations for Auckland Homeowners and Property Buyers

At Mortgage Masters, a domestic or commercial mortgage broker can advise you on the best home loan Auckland property buyers can get in current market conditions, considering interest rates and more. We can also assist existing property owners looking to refinance. To find out about home loan requirements NZ clients should get in touch today for a free consultation.

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