If you’ve been waiting to buy your dream home or invest in a rental property, this could be the push you need. House price growth in New Zealand has largely peaked, the ban on foreign buyers is likely to dampen demand, and an interest rate hike appears unlikely, at least in the foreseeable future. Property experts agree: now’s a good time to buy.
A combination of factors
Results from a recent survey undertaken by ASB have revealed that kiwis are feeling more confident in the New Zealand property market, with close to a majority believing now is a good time to buy.
A combination of slowing house price growth across most of the country – with a flattening of prices in both Auckland and Canterbury – more choice as more homes are listed for sale, and a favourable interest rate outlook are the likely factors driving the improvement in confidence.
Chief Economist at ASB, Nick Tuffley said, "There's a clear view that the momentum of price growth will slow and reach a point of balance. Interest rates are expected to be low and there hasn't been any price growth so we're definitely seeing an incremental shift to more confidence in the market."
Earlier in November, ANZ Bank dropped its interest rate for a fixed one-year term to 3.95 per cent (available for a limited time only), the lowest it’s been since after the Second World War! Some property experts suggested this could be the start of a mortgage rate war as other banks may follow suit and drop rates even further.
"With more question marks over when the RBNZ will eventually start lifting the OCR, given the downside risks to the growth outlook, it's not surprising to see respondents expecting that interest rates are likely to stay low, or shift even lower again, over the coming 12 months," said Tuffley.
Tuffley also said the ban on foreign buyers was likely to reduce demand and further impact house price expectations.
A shared ownership programme
Some potential good news for first home buyers as BNZ prepares to launch a shared ownership programme which will help first home buyers into their own homes in return for a slice of the equity.
Similar to relying on the Bank of Mum and Dad, BNZ explained that first home buyers would be able to apply for a mortgage for part of the purchase price with the balance being paid by a third-party. The buyers would pay a fee to the third-party provider each month and over time would be able to work towards buying the property outright.
BNZ chief customer officer, consumer and wealth, Paul Carter said, "It's a commercial take on the Bank of Mum and Dad for new homeowners."
"Some New Zealanders are lucky enough to have mums and dads topping up their savings, so they can get the deposit to buy a house. Not everyone has family to call on in this way and that's where shared ownership could help."
While it’s still early days and full details have not been released around the conditions attached to this type of deal or who the third-party buyer would be, this could be another step up for first home buyers struggling to get into the market.
To find out more about your options as a first home buyer, talk to one our property advisers.
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