Market Update - February 2024

As New Zealand comes out of its sleepy summer period, the housing market is starting to pick back up with plenty of local listings hitting the market since the new year. Real estate agents are reporting great turnouts at open homes and a strong market to start the year, and here at Loan Market we have been busy with lending enquiries. 

First home buyers and owner occupiers are still the most active buyer groups, with many starting to raise their price expectations with the slight upward movement in the market. Open home attendance remains high which is good news for sellers, and while deadline sales and offers are still typically the preferred sale method, auction rooms are beginning to heat up once more.

HOUSE PRICES

According to data from REINZ, the average house price in Dunedin for January was $575,000, which is up 11.7% on this time last year, but down 5.7% on December. There were 84 sales across the month which was significantly down on December (to be expected with the summer holidays), but up on January 2023 by 20%. 

Houses in the Otago region are on the market for approximately 53 days before they sell. This is down 6 days on last year which shows the market is starting to pick up. 

DTI’s & LVR’s

The Reserve Bank plans to implement DTI ratios (debt to income ratios) mid year which will impact how much households can borrow based on their income. This is to make sure people don't take on too much debt, and will likely impact investors more than owner-occupiers. It’s also looking likely that LVR (loan to value) rules might become a bit more flexible. This could be good news for people with less than a 20% deposit trying to buy a home.

If the changes happen, it means that for investors, 5% of loans can go to people with less than a 30% deposit (right now it’s 35%). For those buying to live in the house, 20% of loans can go to people with less than a 20% deposit (up from 15%). This might make it easier for people with smaller deposits to get a loan. At this stage, there will be little change felt, but this is good to keep in mind if you are thinking about buying in the second half of the year.

INTEREST RATES

Interest rates have shown signs that they have peaked, which will come as a relief for many. Some big banks are starting to slightly lower their fixed rates, and while we don’t expect big drops in interest rates soon, this is definitely a good sign and will give confidence to those looking to buy a property.

LAND AND BUILD

It’s been no secret that it has been expensive to build with build costs rising dramatically. Thankfully this trend has slowed down significantly, and building costs are now rising at the slowest pace in the last 7 years. This is great news for anyone currently building or looking to build, and means a little more certainty in your pricing costs, especially if you are undertaking a custom build. Lending for builds is quite different to that of buying an existing property, so it’s important to get the right advice. 

If you are looking to buy or build and want to know how much you could borrow then get in touch with the team at Loan Market Dunedin. We know exactly what’s happening in the local market and can make tailored recommendations based on your personal goals and situation. Get in touch with us today. 03 471 8825