Property markets move in cycles, ups and downs, ebbs and flows, and the commentary says we are approaching the peak of interest rates, and my internal radar says we are at the bottom of house values.
We have seen the property market go through a tumultuous cycle over the last 3 years. As Covid hit, the Reserve Bank swiftly reduced the OCR, banks reduced mortgage rates and property values and activity increased, driven by cheap money and FOMO (Fear of Missing Out). From late 2021, as the Reserve Bank increased the OCR voraciously, the banks followed suit and increased their lending rates ahead of the OCR, which has resulted in a steady decline in sales numbers and property values since the peak of November 2021. I rarely make predictions, but I’ve seen this all before and believe you are unlikely to find better buys than what the last three months have given purchasers.
REINZ market data from the end of February indicates the total number of properties on the market across New Zealand was 29,083, up 25.0% year-on-year. In Lower Hutt we saw a 17% decrease, and the median price point around $750,000. The gap between new homes and existing homes is greater now than it has been in 40 years, the biggest indicator I use to determine we have hit the bottom.
Economic data also suggests there is a change, GDP has dropped, we are currently in or close to a technical recession, which will pull back inflation. There is little reason for the Reserve Bank to increase the OCR significantly further, and banks have set mortgage rates ahead of the OCR, they are unlikely to increase much more. Buyers can confidently plan their future outgoings with stable interest rates and decreasing inflation and will be able to confidently buy. Now is a great time to get into the market, buy a first home or trade up
Here are our 3 top tips to get into market:
- Research neighbourhoods and homes: Once you have an idea of your budget, you can start researching the homes that fit your needs.
- Visit open homes and schedule viewing appointments: Once you've identified a few homes that you're interested in, visit the open home, or schedule a tour of each property. Take notes and make sure to ask the agent questions about the property, including any repairs or renovations that have been made. Procrastinate at your peril.
- Have your home market appraised: If you are going to sell your home before you buy, get an appraisal on your home to give you an idea of the value of your property in the current market.
Median Sale Price Per Suburb
