First home buyers continue to make inroads

The market continues to breathe a sigh of relief as the prospect of capital gains tax fades into the rearview mirror, while first home buyers put their best foot forward taking full advantage of a loosening in LVR regulations and low interest rates. 

Median house prices ticked up 3.2% in May to $560,000 with 11 of 16 regions registering a lift, even the long labouring Auckland Market ground out a 1.2% increase. 

Regional NZ continues to punch above its weight with value growth outstripping major urban areas again. Gisborne (+54%), Southland (+16.7%), and Manawatu/Wanganui (+14.4%) led the way, while West Coast (-14.0%), Tasman (-4.1%), Northland (-1.9%) experienced the biggest drops. 

Sales volumes continue trending lower, down by 7.8% year on year. That said, May marked a significant 20% month by month rebound from April where the market was stalled, tenuously waiting to hear what the PM had to say about the now ditched Capital Gains Tax proposal. 

It's taking a little longer to flick a property with the median days to sell ticking up 3 days to 41, however outside of Auckland this number barely moved - up only 1 day to 38 days. 

As value growth slows first home buyers continue to make strides against other buyer groups, increasing their market share for the second quarter to an all time high of 23.9% of sales. In Auckland this was even higher at 26.0%, while Wellington suburb of Porirua registered a whopping 37.6%

RBNZ lending data shows first home buyers have pounced on looser LVR restrictions with strong lending growth from loans at over 80% LVR. The continued resurgence has also been supported by aggressive competition among lenders for business, falling interest rates and reduced competition from other groups. 

Some good news for landlords as rental yields continuing to rise, albeit from a low base in many areas, offsetting some of the negative impact from the wall of legislation being rolled out by the government, which included ring fencing of losses coming into play in April. 

With rents increasing nationally faster than property values and some landlords looking to exit the industry due to the increasing compliance burden there will be some good deals for savvy investors. We have an exclusive lending product on investment property up to 80% LVR so I can help you take advantage of this. 

Looking ahead

The future carries some uncertainty with no shortage of things to keep an eye on.

On the supply side, capacity constraints still exist and there are some concerns around capital availability with the Reserve Banks review of capital requirements. It seems likely residential building consents will stay flat or fall as the year progresses and sales volumes will remain flat. 

While banks may need to raise additional capital putting pressure on rates, this is offset by a slowing economy and subdued inflation increasing the prospect of further OCR cuts. There has been talk of another loosening of LVR restrictions later in the year as well, which will be further music to the ears of first home buyers. 

Whatever the outcome the prospect of strong competition among lenders remains, meaning the mortgage wars might not have reached a cease fire yet. Please feel free to reach out to me so I can find you the most competitive deal for you and your needs in this lending environment. 

Another thing to keep an eye out for is the much vaunted and long awaited KiwiBuild reset. Most would agree things can only get better for Kiwibuild after 18 months of ridicule and embarrassment for the government, they surely can’t get worse... Will the rejigged scheme finally add to the supply of affordable homes or continue to struggle? 

It's shaping up to be an interesting few months ahead that's for sure. Get in touch and I can help navigate whatever is thrown your way in the lending space.