House prices

PHOTO: House prices in NZ are unsurprisingly still increasing. FILE

Press Release: Shopless

Is now the best time to buy a house? House prices in NZ are unsurprisingly still increasing, with the national average house price reaching $922,421. This is a record high that’s 24.8% higher than a year prior. As of June 2021, the average house price in Auckland was $1,283,895.

Trends for House Prices in NZ

In June, the rate of housing price growth finally started to slow in 12 of NZ’s major markets. The pricing increases that have been growing over the past year cannot continue forever. There will be a point where it drops off, and hopefully, that will happen soon.

Housing prices are likely to continue to grow over the next year, although at a less steep incline than the year previous. It is likely that we will still see the average house price in Auckland go up, for example, but not by as much as it has in the past year.

Wellington has experienced the largest annual increase in house prices, up 30.8% from last year. However, in June, the house prices in the city rose just 2.3% compared with Christchurch’s 3%. It seems that some of the cities that have previously not experienced a surge in housing prices are slowly catching up to match the rest of the country. Christchurch is an excellent example of this, as it’s an area that hasn’t had much growth across the past five years and is now rapidly increasing.

House price crash

House prices could drop soon, Reserve Bank predicts | WATCH

Tighter Lending Restrictions Introduced

The days of low-deposit lending are coming to an end, with The Reserve Bank suggesting that they are going to start tightening the restrictions around this. Before this plan can go ahead, they plan to consult with the major banks. The current proposal is that the new regulations will be introduced in October 2021.

If it goes through, only 10% of new owner-occupier loans will be awarded to buyers with less than a 20% deposit. There may also be debt to income restrictions still to come, with the goal of not allowing kiwis to get drowned in debt.

As house prices in NZ have increased dramatically and mortgage debt is higher than ever before, there is concern that some buyers could potentially be facing the prospect of negative equity. In this scenario, their mortgage could be more than the value of their property.

As a result of these proposed changes, it may take first home buyers longer to save up to buy a house, as they will need a higher deposit. First home buyers are already the ones losing out, having to shell out far more for homes than this time last year.

From June 2020 to June 2021, the average price of a buyer’s first home has jumped from $535,000 to $685,275. With the average house price in Auckland being significantly higher than the rest of the country, first home buyers in the city are essentially already priced out of the market.

The new restrictions, however, may act as a way of stabilising the fast-growing market. No longer will it be a seller’s market, as fewer people will be able to afford a deposit. This may offer some much-needed balance to the industry.

The Price of Building a House Rises

With the new restrictions and increasing house prices in NZ, many first-time home buyers are turning to building their first house. However, this may not be feasible for much longer as the costs of residential construction are also on the rise.

CoreLogic data shows that the costs of residential construction increased by around 2.2% in the second quarter. This was the most significant increase the Cordell Housing Index has recorded since beginning in 2012.

Is Now the Best Time to Buy?

New Zealanders who have been aiming to buy a home with less than a 20% deposit will need to act fast before the proposed change to restrictions is put into place. However, it is challenging to find a house right now with the amount of demand. Many of these potential buyers will lose out and have to wait longer as they save up a higher deposit.

If you have already saved a deposit of 20% or more, it might still be better to buy straight away. Many forecasters are expecting an increase in interest rates in the months to come due to strong economic performance in the first quarter of 2021. This has increased expectations of inflation and, therefore, short-term interest rates. So, getting ahead of this can save you thousands of dollars in the long run.

Newer websites like Shopless, which is about to release house listings, are a great place to look for homes. Beat the rise of house prices in NZ by avoiding the larger websites, as these sites are the ones that the majority of buyers flock to when looking for homes. This generates more competition for each listing, and you may lose out on your dream home.

Soure: https://blog.shopless.co.nz/house-prices-in-nz/

@propertynoise

#happyathome #newzealand #allblacks #rugbyunion #rugbybricks #viral #nzrugby #rugby #lockdown #lockdownlife #lockdownnz

adsense

♬ original sound – Property Noise Group

MOST POPULAR