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There is nothing more attractive than confidence, and based on this, the housing market has once more become very alluring. In fact, it is very difficult to take your eyes off it!
A recent survey shows evidence that there is confidence in the housing market again.
Despite what the media has been saying over the last few months, people have actually sorted out the truth on what the bank will lend them, and then have been able to purchase their first homes. Meanwhile, doing so with conditional offers and with no competition!
Economist Tony Alexander argues that the housing market has all but hit as low as it will go, and that the current prices have settled down. And first-time buyers are coming back.
“While buyers are concerned about high interest rates, access to finance, and prices falling after buying, it appears first-home buyers may be focussing on the thing most important to them. That is securing a house to live in and raise a family rather than trying to get the last 5% or so of price declines in the housing market.”
Over the last number of years, the market grew, and grew. It started in the main centres first, then spilt out into the smaller parts of NZ (this is the norm and how growth usually plays out as people get priced out of their local markets, and purchase in smaller cities/ towns). Then when the extreme house prices stop soaring (for whatever reason), all house prices nationally decline. However, the main centres stop declining sooner and bounce back quicker. This is due to the fact they have the luxury of higher incomes, higher demand for people to live there and therefore more buyers. While in smaller parts of the country, they do not have this safety blanket. So, the decline is more impacting and reflects the true demand of the city. Meanwhile the media continues to tell the doom and gloom story well beyond any correction that has actually taken place, and we assume this is true for all of NZ.
Wellingtonians have higher incomes than most (and it needs to be with the cost of living), so when the news reports on plummeting prices, and while this is true in part, (as stated above) this stops sooner in larger cities. As banks assess everyone in NZ the same, and higher incomes means higher borrowing. Even with the banks making lending tougher, houses are being sold in wellington, and again with more competition. Real estate agents reporting shows more shoes at the doors of open homes and multiple offers again.
Contrary to popular belief, Interest rates are still good, it’s just that we are comparing them to a time in world history when the sky (economy) was actually falling, so interest rates needed to stay low.
Yes, it was fun while they lasted, allowing us to buy a home, go out every weekend and maybe a weeknight or two being a very comfortable norm. My current clients are still able to purchase, afford to pay the loan, however now they are finding they just go out less, and need to adhere to a budget.
Find out your truth, including what you can borrow. Run a budget, then see if you can find a property that fits your numbers. This exercise will inform you that if you are unable to purchase today, that you are able to come up with a plan to buy. Confirming you have your KiwiSaver set up to maximise your returns, coming up with a savings plan, living like you already own your home so your accounts look great to the banks, and confirm you are even at the best bank for you. This will give you the confidence needed to purchase and will in turn make you attractive to the banks.
Purchasing in the current property market is a very real thing, and once again there is no better time to buy than today.
Lance.
About Lance
Hi, I’m Lance a Financial Adviser here at Velocity Financial. People in Finance love to make it all seem too complex. I see my role as removing these barriers, opening your opportunities, and connecting you with the sharpest and most helpful professionals Wellington has to offer. I am interested in people and enjoy being part of key (and often the most stressful) stages in their lives. From my background in heading up large social development projects, finding finance and resource to bring about change for some of our most vulnerable New Zealanders, to my role as a marriage celebrant helping organise one of the most dramatic, stressful, wonderful, precious days of people’s lives. Now as a Financial Adviser I'm able to help people reach their financial goals and help provide security by insuring them against life's challenging times. I love being active, boxing, running, surfing, basically if there is a chance of some form of activity I am on board. Music is extremely important to me, and I have been privileged to travel around many parts of the world playing drums.
Disclaimer: Lance Shearman (FSP431426) is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Lance’s disclosure statement on our website.