Treasury warn that house prices might fall 7% from their current levels. But chances are they are much too pessimistic and the recent rise in prices will continue.read more
25 Reasons why house prices are rising.
Treasury warn that house prices might fall 7% from their current levels. But chances are they are much too pessimistic and the recent rise in prices will continue, though at a slightly slower pace because there will be some bounce-back effect in price gains these past three months. Average NZ house prices now sit 1.5% above levels in March.
Housing market post lockdown
- Interest rates
The Reserve Bank cut the official cash rate 0.75% in March and since then floating mortgage rates have fallen to near 4.5% from 5.3%. The two-year fixed rate has fallen to 2.65% from 3.55%. Term deposit rates have also fallen, with the six-month rate going to 1.3% from 2.3%. Lower interest rates have made purchasing a home more affordable, and encouraged investors seeking higher yield than now offered in bank term deposits, to look at other assets including property.
- Interest rate expectations
It is not just that interest rates are low. The Reserve Bank have made it clear that they intend to keep rates low for many years, with assistance from the US Federal Reserve, which has just shifted their policy stance toward multiple years of low rates to try and generate inflation above 2% for a number of years. Also, our central bank has indicated it may introduce a negative official cash rate next year.
Expectations that interest rates will stay low are encouraging people to expect that other people in the future will be seeking higher yielding assets including property. So, they are buying before this expected extra demand comes along.
- Migration boom
Even before we had heard of Covid-19, from the middle of last year a change was occurring in the net flow of Kiwis across our borders from negative to positive 2,800 come the end of 2019. By March this year the net Kiwi flow was +13,000, contributing to a record net inflow for all countries of 90,000 from 50,000 a year earlier.
We already have in the country the net migration gain we expected would be recorded by just after the middle of 2021. This means extra pressure on rental accommodation, allowing investors to (now) raise rents, whilst discouraging them from selling and encouraging more purchasing.
- Migration expectations
Most Kiwis expect that when the borders reopen, we will see a great number of our expats coming home – along with many foreigners wanting to shift here. Expectations of a coming horde which will purchase property is encouraging extra purchasing now – especially with people swapping stories of expats buying property unseen whilst still offshore. The numbers doing so are however probably very low.
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SuperCity Vehicle Loan Portal
A snapshot of your world and lifetime cashflow modelling.
Recently, with the current environment, people are reaching out and telling us they’re worried about a number of things.
Giving you peace of mind
Our clients have said they are:
- Stressed about their financial circumstances.
- Concerned around potential changes in their personal health.
- Uncertain if their existing insurance fits their current needs, or anxious because they’re financially exposed with no cover.
Don’t suppose any of these are an issue for you? Part of looking after you is to make sure your lending commitments can be supported in the event your circumstances change. Jaime and the SuperCity Insurance team have been busy helping clients with financial modelling.
- Clients are often telling us they have more clarity on where they’re at right now because the team can show them a visual snapshot of their world over Zoom. The team model out scenarios that might be a concern for clients, such as ‘what if my income drops?’, and explore ways to help reduce debt and work on building and protecting their lifetime cashflows. Check out their Financial Modelling Demo. If you would like some help, please contact Jaime directly.
Managing Director, Principle Insurance Adviser
M 021 527 069
Level 26, PwC Tower, 188 Quay Street, Auckland 1010
As a valued client of SuperCity you have access to the following free services
- Advice & recommendationsWe are available to provide expert independent advice and recommendations for your home loan ongoing, all you need to do is email, txt or call either of us.
- Fixed rate home loan reviewsWe’ll help you get the best interest rate in the market for your home loan and contact you well before the bank does.
- Refinance optionsWe’ll help you refinance if you’re not happy with your current bank.
- Home loan top upsWe’ll help you top up your home loan if you need extra funds, for example, to pay for renovations on your home.
- Car loansWe’ll help you get that dream car or to refinance your existing car loan.
- Need help with your life and living insurances?We can connect you with our award winning Insurance Adviser, Jaime James to ensure you’re protected for the things that matter most, your health, family and the most important asset, your income.
- Personal insurancesIncluding home, contents, boats and cars.
- Need help with legal?We can connect you with a Solicitor to assist with the settlement of your home loan, setting up a Trust or for estate planning.
- Regular communicationWe’ll contact you regularly to ensure all is going well with your home loan and to keep you updated with any helpful tips and tricks.
Have a great day and we look forward to helping you achieve your financial goals and plans.
Up-to-date market news.See our archives to catch up on previous issues.
with market changes
We have been closely monitoring
the impact of COVID-19 on the
New Zealand property and mortgage
market again, where things are
fixed for 1 year
Mortgage wars! Lending policies are changing daily! Now, more than ever, is the time to be engaging with a mortgage broker who is experienced and professional.read more