So, the housing market in New Zealand has had its ups and downs, right? Recently, we’ve seen prices drop due to interest rates going up and the rising cost of living. But it looks like things might be turning around sooner than we thought! If you’re holding off on buying a property, you might want to consider the following in how that decision could affect your borrowing power once prices start going up again.
As we have seen, there’s a crazy demand for housing in New Zealand! We’ve got this shortage of affordable homes and tons of people flocking here. Real estate agents are noticing more and more buyers showing up at open houses, especially first-time buyers. Even Auckland’s auction clearance rates are showing signs of picking up. Looks like this market is coming back to life faster than anyone expected! According to economist Tony Alexander, buyers are getting less worried about prices dropping and more concerned about missing out.
Property investors are also itching to jump back in too. Why? Well, there’s talk of a possible change in government after the upcoming election, and that’s got them all fired up. If that happens, we could see some sweet competition and higher prices. Plus, there are some legislative changes in the works. The National party wants to bring back a tax advantage for investors that the current Labour government is phasing out. It used to be that investors could deduct mortgage interest from their rental income for tax purposes. But hey, National wants to reverse that. They also plan to shorten the bright-line test period from five to ten years to just two years, which means most investors won’t have to pay capital gains tax.
Good news! The Reserve Bank of New Zealand (RBNZ) has hinted that they won’t be raising the official cash rate (OCR) above 5.5 percent. They did increase it by 25 basis points in May, but that might be it for a while. Of course, we can’t say for sure what the future holds, but there’s a chance that interest rates might even start going down next year. How cool would that be?
So, if you’re planning to buy a home in 2023, here are some things to keep in mind:
As we have discussed, the New Zealand housing market is gearing up for a big comeback! We’re talking more demand, potential changes in government and legislation, and even stable interest rates. So, if you’ve been dreaming of owning a home, now might be the time to make it happen. Get your ducks in a row and reach out to Nick Coyle Mortgages today for personalised advice. We will hook you up and help you achieve your dream of homeownership. Good luck!