Nathan Miglani on why 2021 could be your year
THIS COULD BE YOUR YEAR!
2020 was one out of the box for the real estate market. Far from
the downturn many predicted when we went into the initial
COVID-19 lockdown in March 2020, it turned into the busiest
market financial adviser Nathan Miglani has seen.
BY SEPTEMBER 2020, BINDI
Norwell, CEO of REINZ, was calling 2020 the busiest housing market since 2016, with a 39 per cent year-on-year increase in the number of property sales in Canterbury – and a surge in prices for a local housing market that had seen subdued growth for some time.
The Reserve Bank put LVR restrictions on hold to stimulate the housing market – and stimulate it did, with huge numbers entering the investment property market, encouraged by ultra-low interest rates that 1) made borrowing incredibly affordable and 2) made it unappealing to have money in the bank. As a result, in 2020 our office secured finance for as many investors as we helped in the previous three years combined!
The competitive market has been hard for first-home buyers. While property investors can often make strong unconditional offers, firsthome buyers usually need a finance condition, making it hard to compete. What’s more, in the era of COVID-19, banks are risk-averse and analysing applications in great detail, lengthening processing times and making approval harder to get.
In my view, however, things will get easier for first-home buyers this year. With the return of the LVR restrictions, the playing field will start to level up. There have been signals from the government suggesting policy changes aimed at readjusting the housing market, so I’m hoping this will be the year many first-home buyers can get onto the property ladder!
The frustration of a booming property market has also been felt by those trying to build new. We had a huge level of enquiry in the latter part of the year from buyers keen to build – and many were getting the impression there was a shortage of land to buy.
In reality, land is available, but as with every other part of the market, turnover has been rapid, with new subdivision releases often selling out within a week. It will nonetheless be comforting for buyers to know there will be more land available in 2021. Conversations with developers indicate around 900 new sections will be released across Selwyn, Halswell and Lincoln.
But even with these changes, don’t expect the market to suddenly cool. As economist Tony Alexander points out, waiting for house prices to fall is a strategy that has been proved wrong time and again. If you’re looking at buying in 2021, it ’s far better to focus on how you can get into a position to compete.
That means enlisting the help of a professional mortgage adviser. It’s all too easy to make the wrong move under pressure, so getting the right advice is essential. A good mortgage adviser will get your application into shape, pre-empting issues before it ’s in front of the banks. Here at Loan Market Paramount, we have access to all the banks: a clear advantage when you can send one application to four different lenders and get back four different answers. In this environment, simply talking to your existing bank might not put you in the strongest position to compete!