A 2020 Review | Your Home News by Ray White & Loan Market

As we enter the Summer months, it’s been great to sit back and reflect on what a crazy year we’ve had. At the start of the year we had plenty of optimism around Christchurch and around increasing property values after a fairly sustained plateau period, we started to see some momentum and then COVID came along. I think most homeowners were very concerned about the speculation of house price reductions of anywhere between 10% to 15%, as these predictions were coming from some of the most well-regarded economists here in New Zealand.

Once we bounced back from COVID in May, things have been going gangbusters since. The housing market is on fire, low interest rates are primarily driving activity, and first home buyers are finding that mortgage repayments on a home that they wish to purchase are the same or less than what they are paying in rent. So, considering all of this, it makes sense to get into the property market while interest rates are so low.

We have also got a lot of people who are getting older and may possibly have money sitting in the bank, who are not getting a very good interest return because interest rates are so low. They are now turning their intention towards purchasing property as an investment and therefore further driving the market along.  As a result of the first home buyers, people selling and upgrading, and those looking to buy investment property, we have seen a massive shortage of stock comparative to the demand in terms of buyers coming into the market. That’s meant house prices have held firm, and in fact, increased, during the course of this year. 

Low interest rates are a hot topic, we have seen in October that one non-bank lender came out at 1.99% 1 year fixed, and while there are a number of conditions attached to that, the main banks don’t appear to be chasing to compete with that offer. However, it does highlight that there is potentially more margin reduction there from the main banks and again the economist’s predictions are that as we enter 2021, we can expect to see further interest rates drop. So, looking forward, over the next 6 months or so, with strong predictions of further drops in interest rates, I can’t see how the demand for property will drop off unless there is another sustained round of job losses. Therefore, as we enter 2021 it appears the market will remain buoyant and house prices will remain firm and activity high.

So, for those who are thinking of getting into the market, it is competitive especially for those first home buyers in which it’s becoming more difficult to get in. But what I would say is keep persisting, see if you can get support from family to bump up your deposit and your price-range, and try to get in the market and stay in the market. For those that are looking at buying and selling, there’s good opportunity to have repayments on their home loan about the same as they are now, but perhaps get a better-quality home. And for investors who are looking at getting a better return on their investments with these low interest rates, in many cases, having a cashflow positive investment means also getting good increases in value!

So it’s good timing to be in the market, as a Mortgage Advisor we are really busy, we have access to all of the lenders, will provide the right advice, and give you help with your home loan needs throughout 2021.