First-home buyers returning to the market

With property market activity and prices continuing to ease, July 2022 saw the return of first-home buyers, according to the latest data from the Real Estate Institute (REINZ). 

If you’re thinking about making a property move, here are some key things to know. 

Is this the easing part of the market cycle?

Across New Zealand, median prices for residential property dropped 1.8% annually, and 4.7% month-on-month. It’s the first decrease in the national average price since July 2011. 

Looking at regional data, Auckland was one of five regions that saw an annual decrease in the median price (down 5.6%), alongside Wellington (down 5.9%), Tasman (down 4.6%), Otago (down 3.7%), and Manawatu/Whanganui (down 0.2%). 

It’s interesting to note, though, that some regions were still experiencing double-digit growth in July. Among these were Nelson (up 16.3% year-on-year), Taranaki (up 15.9% YOY), West Coast (up 14.7% YOY), and Canterbury (up 13.6% YOY). 

So, what may lie ahead for house prices? “Real estate markets are cyclical, after a period of strong upward movement, it is slowing,” said REINZ chief executive, Jen Baird. “However, prices tend to decrease more slowly than they increase and, after a period of stability, the market tends to regain momentum and median prices start to climb. We are in the easing part of the market cycle.”

Opportunities for buyers as number of listings doubles

All regions saw an annual decrease in the number of sales, and across New Zealand, the sale count was down 36.7% compared to July 2021. 

“A combination of increasing interest rates, inflation, supply-chain-affected cost structures are contributing to the current market dynamics, as people show caution, which slows demand,” Baird explained. “At the same time, the number of properties increased significantly compared to 2021 – up 107.8% annually.”

With more listings available, motivated buyers have an upper hand, which is prompting many vendors to adjust their price expectations. And according to Baird, the higher volume of stock is not due to vendors being unable to afford rising interest rates and having to sell, but rather the fact that many buyers have stepped back. 

But this may be about to change. “Agents across the country report they are starting to see demand return from first home buyers in the market and some are seeing renewed interest from investors,” said Baird.

Is now a good time to buy a home?

It’s an age-old question, and there’s no easy answer to it. To help you better understand the factors involved in this decision, here’s an interesting read from property market analysts at CoreLogic.

In short, while you may want to ‘wait and see’ if the market drops further, it’s also important to consider higher mortgage rates down the line. No one knows how low house prices will go, and if or how much mortgage rates will rise. But as CoreLogic’s analysts noted, inflation is not yet under control, so it’s likely that the Reserve Bank will continue to increase interest rates in the near future. 

As mortgage advisers, we can’t tell you whether now is a good time to buy. But, we can help you understand your mortgage options and how to structure it to achieve your property goals. Get in touch if you have any questions.

Like to talk?

If your fixed-term mortgage rate is due to expire soon, or need a mortgage for your next property move, please don’t hesitate to contact us. While we don’t know what the future may hold, we can help you understand your options and structure your home loan based on your needs.  

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.