2024 Market Update
After a quieter period thanks to the holidays, the residential real estate market is again beginning to pick up. The end of December and most of January are typically very quiet periods for both lending and real estate, as much of NZ enjoys a summer holiday. So what's been happening and what's predicted for 2024? Let's take a look....
HOUSE PRICES
Queenstown continues to buck the NZ price trends, with figures from Valocity showing the town recorded value growth 4% quarter-on-quarter and 6.3% year-on-year. While many regions around NZ remained stagnant or only showed minimal growth, Queenstown is outperforming the rest of the country.
The average house price is now sitting at just over $2 million and sits $75,000 above its post Covid peak.
So what does this mean for the average owner-occupier or first home buyer wanting to make a move? There are still plenty of properties on the market under even the $1 million mark and it is still possible to get into your first home. There are many suburbs in Queenstown that influence this price, and just as many that offer homes in lower price brackets. If you are looking to buy and unsure what you can afford, then absolutely come and see us before you make a move. We can set you up with a budget and game plan to help you make that next move into a home.
DTI’s & LVR’s
In the middle of the year, the Reserve Bank has indicated that DTI ratios will be announced. This means there will be a limit on the amount of lending households can take on, as a multiple of their gross income. This is mainly used to ensure banks don’t take on large amounts of debt from borrowers and that the debt can be repaid. DTI’s tend to affect investors more than owner-occupiers, but it can have an effect on those looking to buy with a lower deposit.
It's also expected LVR restrictions will be loosened, which will be welcomed, especially if it enables more borrowers with less than 20% deposit to get pre-approved to purchase existing property.
This means no more than 5% of housing loans to investors can go to borrowers with deposits of less than 30% (right now it’s 35%). For owner-occupiers, the cap is on 15% of borrowers and this will be increased to 20%. This means that 20% of their lending can go to borrowers with deposits less than 20%. This will hopefully help more low-deposit borrowers to access lending.
In the meantime, there will be little to no change due to the assessment rates being so high, so this is something to keep in mind if you are looking to buy in the second half of 2024.
INTEREST RATES
Interest rates have shown strong signs that they have peaked, with some of the major banks beginning to slightly reduce their fixed rates. We don’t expect to see huge reductions in interest rates anytime soon, but a plateau to slight reduction will allow many to breathe a sigh of relief, and give confidence to those looking to buy. However a cat has been put amongst the pigeons with the ANZ Chief Economist stating that the RBNZ should raise the Official Cash Rate (OCR) 0.25% this month and the same in April, bringing it to 6%. We are watching this space to see what happens, so if you need tailored advice don’t be afraid to reach out to use directly.
If you are looking to buy a home or refinance your current mortgage, then get in touch with our team. There’s definitely a lot happening in the market at the moment, and we keep on top of all these changes and predictions to give you the most up-to-date advice possible. Give us a call on 03 441 1307 to book a free chat, or start your journey by clicking here.