Tom Peters said once ”if a window of opportunity appears, don’t pull down the shade” and for first home buyers looking at the Auckland property market
As mortgage brokers we provide information and advice for first home buyers.
Mortgage Brokers Know About The Market
Being so closely involved with both the finance and property markets mortgage brokers are at the forefront of market changes and for the past 2-3 months most brokers have seen the property market shift from being a sellers’ market to a buyers’ market.
This does not mean that vendors will struggle to sell houses or that prices will drop, but it does mean that some of the heat has come out of the Auckland housing market and that creates opportunities.
If you have listened to the media you would have heard that auctions have slowed over recent weeks too.
Have The Chinese Buyers Left The Auckland Market?
There has been some blame pointed at the Chinese buyers and how they were pushing up prices, and some of that may have been true to some degree. What has changed for Chinese buyers is the government back in China has made it harder to shift money out of the country and that has seen a reduction in the cheap money that was available to them. In addition the New Zealand government has made some changes which apply to foreign buyers who now need an IRD number here.
Combine what is happening and understandably Chinese residents are uncertain in regards to what they should be doing and therefore are not as active in the market. Of course this really only applies to overseas based buyers and it doesn’t mean they will not start buying again – just that they need to change the way they are doing things to comply with the new environment.
Property Investors Need 30% Deposit
New rules have been introduced which require property investors to have a 30% deposit when they purchase a rental property in Auckland using bank funding.
The advantage of this new rule for first home buyers is that many property investors are needing to adjust the way they fund their property purchases and until they get things sorted out there will be a window of opportunity while less buyers are in the market.
The easy option for property investors was to move to other towns like Hamilton, Tauranga and Rotorua and other areas of New Zealand where they can buy cheaper property with a smaller deposit, but it will not be too long before they come back to Auckland where the demand is higher and where they could still use non-bank lenders to buy investment property with a 10% or 20% deposit rather than the 30% required by the banks.
High Immigration Will Continue
Most people think that high immigration will continue and overseas kiwis are still coming home to our beautiful country. With everything happening around the world we could start seeing people arriving from other parts of the world and that will see additional pressure on housing.
Low Interest Rates Are here For A While
It appears that the low interest rates we have seen recently could be here for some time yet and economists are predicting further reductions.
Of course this makes it more affordable to borrow money.
Low interest rates help all borrowers and while it make seem like a great help for first home buyers there is the real risk that people will be prepared to pay more for houses and that pushes up the prices.
Not Enough Houses Being Built
There has been a focus on getting more houses built but the reality in Auckland is there is not enough land ready to build on and not enough builders to do the actual building.
This is making it hard to get enough houses built, and therefore there is still going to be a shortage of houses for the foreseeable future.
What Does This Mean For First Home Buyers?
Simply put, the Auckland housing market is a little soft at the moment but the fundamental issues have not changed, and because of this most people involved in the industry agree that demand will soon mean that the market will return to one of more buyers and therefore higher prices.
Yes, there is a window of opportunity right now and it may be here over the Christmas period but in our opinion it will not be here for too long.
This might be a good opportunity for first home buyers.
