-Jun 18, 2024 By City Sales Ltd

Market Update: Key Changes for Kiwi Homeowners and Buyers - a bulletin report

Key Changes Impacting Kiwi Homeowners and Buyers - a bulletin report

With recent updates from the government’s Budget, the latest OCR decision, and several significant shifts affecting homeowners and potential buyers, there’s plenty to catch up on.

 

  1. OCR Decision:

    • The Reserve Bank kept the OCR at 5.5% as of May 22nd.
    • Despite holding the rate, potential interest rate cuts might occur sooner than the official prediction of late 2025.
    • The best current one-year fixed mortgage rate is 6.85%. Refinancing could lead to better deals.
       

      Although most inflation figures are tracking downwards, domestic inflation remain stubborn. As a result, the RBNZ has said it hasn’t entirely ruled out the possibility of another interest rate hike before the end of 2024. We're leaning with the economists who think this is more of a defensive tactic to prevent banks jumping the gun on mortgage rate drops. Whilst official notice is that OCR will not drop until late 2025 some economists have an unexpectedly sunny prediction of November 2024 being the first cut. This is based on the inflation stats coming in on point in September.

  2. Budget 2024:

    • Tax cuts have been introduced, offering around $40 extra per week for a couple earning $150,000 annually.
    • The Kāinga Ora First Home Grant has ended, affecting first-time buyers, especially in provincial areas.
    • The Kāinga Ora First Home Loan scheme remains available, providing opportunities for low-deposit home purchases which will have access to favourable rates. 

      We have to agree that the Kāinga Ora First Home Grant while helpful, probably wasn't the reason most people made it into a property but was a small sweetner that will still be missed. 
       
  3. Economic Climate:

    • Mortgage arrears have increased by 7%, with $1.9 billion in home loans behind on payments.
    • Business and consumer confidence remain low despite slight improvements.
    • Weak GDP and retail sales figures suggest continued economic challenges.

      If you weren't aware, kiwis are doing it incredibly tough. Housing is typically the first payment made, and the last payment to fall behind. You'd rather lose a car or boat than the house your family lives in. These numbers say a lot about the state of the economy and amount of work needed to get NZ back on track. 
       
  4. Housing Market Trends:

    • The housing market is currently flat, with high interest rates limiting borrowing power.
    • Sellers must adjust price expectations due to the slow market.
    • Expectations for 2025 include potential market recovery, driven by lower interest rates, reduced housing stock, and increased immigration, potentially leading to a 5-10% increase in house prices.
       

      Although there *are* buyers out there, market conditions (high interest rates limiting borrowing power and all that choice) mean they’re not really in any rush to buy. Talk to your City Sales broker about how to create competition in a tricky market. We've been doing it for over 25 years, we've been through these downturns before so this is not our first rodeo. It's so important in times like these to work with someone who has been there, seen it, and can handle it.  

Staying informed and proactive is essential to navigating these changes effectively. 

If you have any questions or need personalised advice, don’t hesitate to reach out to our team. They go know all this so you don't have to. 

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