Today the OCR dropped by 50 basis points to 4.75%, signalling an optimistic economic outlook for many Kiwis which could boost consumer confidence and encourage more buyers back into the property market. Read full update here.
Anecdotal evidence has pointed to a pick-up in activity over recent weeks, and Barfoot and Thompson’s Auckland auction clearance rate has bounced, highlighting the risk that the housing market could be spurred back to life quickly as interest rates fall, (Source: ANZ property focus, Aug 2024).
Growing interest suggests buyers may be eager to act before the market changes, especially after today’s OCR cut. Total active users on realestate.co.nz were at an all-time high during September, up 28% on this time last year.
Additionally, the site experienced the largest international audience in more than 12 months, with searches from Australia up 35%, the United States up 16%, and the UK up 25% year-on-year. Could there be Kiwi’s planning to return home to NZ, or overseas investors? Residential sale enquiries were also up by 9.6% year-on-year, (Source: https://news.realestate.co.nz/blog/new-zealand-property-market-2024-september).
As major NZ Banks continue to reduce interest rates and testing rates – both first-time buyers and investors might have more ability to purchase properties, leading to heightened property competition and house values could start increasing again.
Although Annual Property Value growth for New Zealand shrank to 0.1%, the weekly numbers from the OneRoof-Valocity House Value Index suggest the market is starting to stabilise. In the four weeks to the end of September, the nationwide average property value saw its first gain since the first quarter, (Source: https://www.oneroof.co.nz/news/oneroof-house-price-report-october-2024-46304 )
What does this cut mean for borrowers?
- If a borrower has a floating rate mortgage, the interest rate will decrease following this OCR cut (depending on the lender), potentially up to the full 50 basis points.
- Those with fixed-rate mortgages may not see any immediate effect of the drop until they refinance or their fixed term expires.
- For those who already own a home and are looking to upgrade, lower mortgage rates could provide an opportunity to refinance and take advantage of better terms.
- First home buyers may benefit from lower mortgage rates, making monthly payments more affordable and allowing them to borrow more without stretching their budgets – in turn stimulating the property market with greater first home buyer interest and purchases.
Speaking to a Financial Adviser is recommended to understand what your options are. They can research and find the best rates and terms to suit your financial situation – saving you time and the hassle.
Movement has already begun with Auckland residential house sales showing a spring in it’s step during the month of September, with sales of properties throughout the city up nearly 11 percent when compared to the previous month, and up nearly 20 percent when compared to the same period last year, (Source: https://www.barfoot.co.nz/market-reports/2024/september/market-update ).
While high stock levels will take time to clear, property market shifts are inevitable. Although we won’t see the property market change overnight, it is cyclical, and eventually, we will see movement. For those waiting for the perfect time to enter the market, this could be the window of opportunity they’ve been hoping for.
To book a FREE Consultation with a Financial Adviser, click through below.
