First-time buyers still keen

Young buyers lured by low interest rates are competing for homes in Christchurch amid a supply strangled by the lockdown.

With lenders taking fixed-term mortgage rates below 2.7 per cent this week and deposit restrictions eased, real estate offices and mortgage brokers are reporting high demand from first timers despite the economic downturn.

At the same time, the number of homes for sale is nearly a quarter lower than this time last year.

Mortgage broker Rob Parsons of Mortgage First said that while he had expected pent-up demand, he thought the forecast economic downturn might dampen buyers’ enthusiasm. ‘‘You’d think if people believe property prices will drop, why would you buy this month? But people are wanting to grab those lovely low interest rates, and they’re not too bothered that prices might drop short-term. The big question is: How secure is your job?’’

Some house-hunters were now in ‘‘multi-offer situations’’ or being outbid by other buyers, Parsons said.

Trade Me’s property department reported an upswing in browsing by younger buyers during the lockdown. Its figures show Christchurch asking prices have risen for smaller and cheaper homes, but dropped for larger homes.

Valuation firm QV said prices nationally were ‘‘showing the first signs of fragility’’ and could be on the brink of a downturn.

QV general manager David Nagel said the drop in listings was ‘‘helping to maintain a level of scarcity’’, but the recent Commission for Financial Capability finding that one in 10 households had missed a rent or mortgage payment was concerning.

Nagel said the housing market was seeing ‘‘regional variations’’ as centres reacted differently to the Covid crisis, depending on their reliance on tourism and other affected sectors.

QV senior consultant Kris Rogers said Christchurch was seeing strong demand in the $300,000 to $550,000 range. Open homes were busy, with ‘‘firsthome buyers prevalent’’.

During the lockdown, the Reserve Bank removed the rule that required banks to restrict lowdeposit lending, leaving lenders to set their own terms.

ASB bank’s latest housing survey found people were aware of ‘‘tough times ahead’’ and concerned about job security because of the Covid crisis.

Canterbury respondents were the most likely across the country to consider it a good time to buy a house, but the least likely to think prices in their area would rise.

Real estate firm Ray White said six out of eight homes at its latest Christchurch auction sold under the hammer, with prices ranging from $360,000 to $530,000.

Parsons said investors relying on Airbnb would be the most affected by the Covid crisis. For other investors, mortgage costs were lower but rents might drop with job losses, he said.

Website realestate.co.nz said Canterbury had about 22 per cent fewer homes for sale in May, when the country remained in lockdown, than the corresponding time last year.

QV said Christchurch’s average home value had increased by a ‘‘modest’’ 3.7 per cent in the past year and was now $517,000.