CUTTING THROUGH THE PROPERTY NOISE
There’s always a lot of noise around property in Auckland – so it’s imperative buyers and sellers don’t get caught in the hype. Yes, there are low rates and it’s the season for a lot of activity, but buyers should take their time. At the moment market conditions favour them more than sellers.
Currently, what we’re seeing are unique interest rate conditions, driven by a combination of sustained low inflation, the effectiveness of the Reserve Bank’s loan to value ratio (LVR) rules and recent cooling in the New Zealand housing market. Fixed-term home loans at historically low rates are providing buyers with more certainty.
Other markets outside of New Zealand, such as Australia, are facing challenges, so it’s natural for buyers to ask if the same dramatic price drops can happen here.
Although the New Zealand and Australian housing markets may look the same, they are in fact quite different. For instance, we’ve had LVR restrictions in place for five years now, which means the proportion of customers who are borrowing more than 80 percent of the value of their home is much lower than in some Australian centres. Banks are getting more comfortable with the apartment market as New Zealanders get more comfortable with that style of housing. New apartment builds tend to be larger and good quality, and apartments are a big part of growing the housing options in big centres. We’re seeing more being built and as people get used to the idea of apartment living, I expect there will be more lending to people keen to buy those properties.
Logan Munro is BNZ’s General Manager, Retail Network