The housing market remains in a holding pattern, but that doesn’t mean opportunity has disappeared. In fact, for many borrowers, especially first home buyers and those considering refinancing, current conditions are proving more favourable than they have been for several years. Sales Activity remains subdued, property values continue to drift lower, and listings stocks are still elevated. These factors are creating a market with plenty of choice and less need to rush decisions.
The national median property value stood at $797,944 in August, down just -1.0% from $805,799 a year ago.
Across the main centres , Ōtautahi Christchurch was the only market to record growth in August, rising a modest 0.1%. Elsewhere, values dipped by – 0.1% in Kirikiriroa Hamilton, – 0.2% in Ōtepoti Dunedin, – 0.4% in Tauranga, – 0.5% in Tāmaki Makaurau Auckland, and – 0.6% in Te Whanganui – a- Tara Wellington.
If you would like a full breakdown of the Home Value index in your region, or city, click HERE
Sales are drifting lower but remain at a decent level
There were 6,935 property sales across New Zealand in July, down -6.4% from the same month last year and marking the seventh consecutive decline. That being said, the 12-month running total is still just short of the 90,000 mark, which is relatively normal in a long term context. In other words, sales might not be surging higher – with both buyers and sellers in a cautious mood – but there’s still activity going on. Employment has been sufficiently resilient that ‘forced selling’ is low.
Property values are going nowhere fast
These conditions continue to dampen house prices to a degree. National property values have been trending gently lower, following the sharp adjustment that occurred during 2022 and 2023. Rather than a fresh downturn, the market increasingly looks like it is stuck in a prolonged period of sideways movement. Auckland and Wellington remain the weakest main centres, while Christchurch has shown greater resilience. For borrowers, however, that softer pricing environment is helping to improve affordability and reduce the size of a mortgage required for a purchase.
First home buyers continue to rule the roost
It is therefore no surprise that first home buyers remain one of the strongest groups in the market. Their share of purchases has reached record highs lately of as much as 29%, supported by lower property values, greater choice among listings, KiwiSaver withdrawals, and access to low-deposit lending. More than half of FHB loans have recently been done at less than 20% deposit.
There’s always plenty to watch with mortgage lending
In addition to FHBs taking out a lot of low-deposit finance, the latest figures show that around 5% of lending to investors is being done at less than 30% deposit. That’s still below the mandated 10% cap, but it could in practice represent the peak – given that banks will look to keep a safety margin.
For now, interest-only lending flows remain ‘under control’, with few signs that people are using this option to help with cashflow stress, while the debt to income ratio limits don’t seem to be a major issue either. Meanwhile, bank switching/refi has eased a bit lately, but remains at a high level as borrowers with flexibility in their loan structure chase a new cashback.
More of the same beckons?
With the official cash rate rising and mortgage rates also headed higher, it’s difficult to see a new upturn in the property market getting underway anytime soon. But there’ll always be decisions required for borrowers and of course their advisers too.
At The Mortgage Supply Co, we’re here to guide you every step of the way, whether you buying, selling, or refinancing. Reach out to our team today to discuss your unique situation and how we can support you in navigating the ever-changing property market!
