Jan 23, 2018 5:44:05 PM

2018: A year of change for the NZ property market

Topics: Credit Card Debt, Debt Consolidation, Debt, new zealand real estate, mortgage stress, mortgage adviser, Budgeting, 2018 budget 1

As Auckland’s housing market continues to grow, albeit at a much slower rate, a major bank has forecast a decrease in house prices across New Zealand over the next four years. New Zealand’s labour-led government policies kick in this month, and an easing up of LVR restrictions could be just the boost first home buyers need. Take a look at some of the property market changes you could expect in 2018.

rawpixel-com-268376 (1).jpg

A calmer Auckland property market

There’s no doubt we’re seeing a definite cooling in Auckland’s property market. Measures introduced by the Reserve Bank requiring banks take a more prudent approach to lending have played a large part in the overall slowdown. Rapid price increases appear to be a thing of the past, and the market has settled into a more stable trading environment.

In reviewing 2017, spokesperson for QV Andrea Rush said, "The frenzy in the market of the previous three years induced by high numbers of investors in the market subsided and we saw a return to more normal levels of activity in housing markets around the country." 

Auckland’s median house price rose just 4.8 per cent to $870,000 in December compared to November’s $830,000. The number of properties listed in December also fell steeply, although this was not unexpected with December typically being a quieter period for the property market.

The house price slowdown combined with an easing of LVR restrictions could provide a much-needed boost particularly for first home buyers trying to enter the market.

Reserve Bank to Ease LVR Restrictions

Loan to value restrictions have been eased slightly by the Reserve Bank starting 1 January 2018. Banks are now able to do up to 15 per cent of new mortgage lending to owner occupiers with a deposit of less than 20 per cent. Lending to residential property investors has also improved with banks now able to do 5 per cent of lending to investors with a 35 per cent deposit or less. 

The slight easing in LVR is likely to improve activity and demand in the housing market, but market drivers – low interest rates, high net migration and a lack of housing supply - means house values are likely to hold for most of 2018 with a much lower rate of growth predicted.

Government changes deter investors

While the Labour Government indicated an introduction of a Capital Gains Tax during the lead up to the election, it has since said that no new taxes will be introduced until 2020.

Negative gearing of rental properties – allowing investors to offset losses from one property onto other income – will likely be put to an end. Investors will be forced to ring fence losses to individual properties, a move that will hit investors with multiple properties the hardest and result in around a 20 per cent loss to tax deductibility each year.

According to Westpac, house prices across New Zealand will drop by 5 per cent, with a larger fall predicted for Auckland, as Labour Government policies continue to deter investors.

Get on top of your mortgage in 2018

The start of a new year is always a good time to review your mortgage. Many New Zealanders are paying thousands of dollars more towards their mortgage than they need to simply by not structuring their mortgage properly.

If you’d like 2018 to be the year you get on top of your mortgage, get in touch with one of our mortgage advisers today and book an annual financial review of your mortgage.







While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.

A Disclosure Statement is available on request and free of charge.