Your guide to NZ housing market's 'new normal'
Wednesday, 3 October 2018
ANALYSIS: If you're looking for a guide to making hundreds of thousands of dollars out of the housing market over the next year, sorry - this isn't it.
New data from QV on Wednesday confirmed that house prices around the country are stabilising. There have been small price falls in an increasing number of areas and even those places where values are still growing are increasing at a slower pace.
But, if this is the new normal for the New Zealand property market, what does it look like?
HERE'S WHAT YOU CAN GET FOR $1 MILLION
(based on recent property sales data from Homes.co.nz)
In Auckland
A four-bedroom home in St Johns Rd, St Johns, a five-bedroom house with sea views 70 minutes from town in Snells Beach or a three-bedroom, one-bathroom property in Chipping Dale, Mangere Bridge, Auckland.
Wellington
A four-bedroom, two-bathroom property on Cecil Rd, Wadestown, a house with sea views on Dargle Way, Island Bay, a four-bedroom house in Brooklyn or a three-bedroom villa in Khandallah.
Christchurch
A three-bedroom home in Redcliffs, or a five-bedroom home in St Albans.
HERE'S WHAT YOU CAN GET FOR $500,000
In Auckland
A one-bedroom unit on Jervois Road, in Herne Bay, a three-bedroom house in Waimate St, Otara, or a three-bedroom house in Cargill St, Papakura.
Wellington
A three-bedroom home in Northland, an apartment on Hanson St, Mt Cook, or a house on Ohiro Rd, Brooklyn.
Christchurch
A home 5km from the CBD on Mahars Road, Mairehau, or in Arlington St, Burnside, or a four-bedroom brick-and-tile option on Inwoods Close, Parklands.
AND FOR $250,000
In Auckland:
A section at 5 View Road, Ostend, Waiheke Island recently sold for $250,000, as did a one-bedroom apartment on Day St, in central Auckland.
Wellington
A one-bedroom unit in Johnsonville, or a one-bedroom townhouse in Kingston.
Christchurch
A unit in Longfellow Street, Sydenham, Christchurch, or a three-bedroom option in Crosby Street, Mairehau.
HOW MUCH DEPOSIT DO YOU NEED?
Good news - you don't have to get hung up on exactly what percentage of the purchase price you're borrowing.
When loan-to-value restrictions were first introduced, it was very difficult to get a loan if you did not have a deposit of 20 per cent (or more)..
Those rules still require banks to lend no more than 15 per cent of their new loans to people with small deposits but broker John Bolton, of Squirrel, says it's no longer such a big deal.
'These days we're doing plenty above 80 per cent. New builds are exempt from the restrictions, all the KiwiBuild and so on and that applies for investors, as well, so we're generally finding there's enough capacity in that 15 per cent to do first-home buyers.'
He said, in some cases, banks were lending to first-home buyers with as little as 5 per cent deposit.
Ideally, buyers should have 10 per cent, he said. 'When you have a small deposit you shouldn't have consumer finance debt at all. There's no point fronting up with a 5 per cent deposit and $20,000 on the credit card - that's not going to work.'
Banks usually apply an interest rate premium or other fee when buyers have a small deposit.
THINKING ABOUT SELLING?
The number of listings coming on to the market is starting to pick up - prompting some concern that more choice could weaken Auckland house prices further.
But there are good reasons why you might choose this time of year to take the plunge.
Nigel Jeffries, head of Trade Me Property says the average sale price usually starts to increase in the main centres through spring and summer.
'Spring is a great time to sell your house because everything is starting to look greener and more inviting so your house looks its best.'
But it's not a no-brainer.
'Spring is also the most competitive time of year to sell, so properties can get fewer views and stay on the market longer than other seasons,
There's no bad time to sell your house. It comes down to your motivations when you're selling - if you want a little more money then spring or summer are probably best, but for a faster sale in a quieter market then aim for winter or autumn,' he says.
'My advice to sellers listing through a real estate agency would be to talk to your agent about the best time to put your property on the market. Each property is different and waiting for the right moment could be well worth it in the long run.'
WONDERING ABOUT FIXING YOUR MORTGAGE?
Interest rates are still low and there's no clear indication that they're going to start to rise any time soon. Short-term rates are mostly driven by the official cash rate, which isn't expected to move for at least another year. Longer-term rates are more influenced by international factors.
Economists still favour the one-year fixed rate. Mortgagerates.co.nz shows the main banks are offering one-year special rates of about 4.15 to 4.19 pe cent - or up to 4.89 per cent for those who do not qualify for the special.
ANZ economists say a series of one-year fixes is still the best option.
'It remains the lowest point on the curve, but also provides a short enough duration to quickly benefit if the Reserve Bank were to cut the OCR again, which we see as a non-trivial possibility. It also is a far cheaper option for borrowers than floating rate exposure, which maintains a large cost pick-up to shorter fixed-rate terms.'
AND IF YOU'RE RENTING?
Here's what you can get for $1000 a week
In Auckland
St Heliers, four bedrooms, two bathrooms.
Wellington
A four-bedroom townhouse in Aro Valley.
Christchurch
A six-bedroom, three-bathroom house in Riccarton.
And for $250…
In Auckland
A studio unit in Avondale.
Wellington
A one-bedroom apartment on The Terrace.
Christchurch
A furnished one-bedroom apartment with sea views, in Cashmere.