Six of New Zealand’s 16 regions continue to deliver value growth for their owners, while the rest of the market prepares for a turnaround after the Reserve Bank cut the Official Cash Rate (OCR) for the seventh time in two years.
With a record-high level of listings and a cash rate now down a further 0.25% to 3%, property buyers have a rare opportunity to capitalise on the market’s mood.
The August house price report produced by OneRoof and its data partner Valocity describes the Kiwi market as “stuck in a rut”.
Our current market dynamics, which are now heavily influenced by lower interest rates and a record-high number of listings, present a great opportunity for first-time buyers.
They are likely to find compelling prices in many of New Zealand’s urban centres and an abundance of choice.
If some of the cities, prices may remain beyond reach. In this scenario, first homebuyers should consider “rentvesting” – a strategy in which they buy a property in an affordable area and rent it out, while continuing to rent themselves in their preferred city location.
The OneRoof-Valocity housing report suggests the average price of a home fell $1,000 last month to $961,00.
The average value in the bellwether market of Auckland remains at an eye-watering $1.27 million. However, our biggest city remains under pressure from a mixture of high listing numbers and economic uncertainty. Over the past three months, the survey has found prices dipped 2%.
North Island in general has seen flat or slightly negative value growth over the past 12 months. The current environment presents an opportune time to upsize or invest before the market enjoys its inevitable bounce-back.
Only one region on the North Island, Taranaki, has seen deal-sizes increase year-on-year, albeit by 0.1%. The Northland market has held its own but values elsewhere have dropped at least 1%.
The capital has suffered most on the North Island. Owners in the Wellington region have seen values slip 4% to $845,000, says the OneRoof report.
The picture is brighter elsewhere, especially on the West Coast (3%), in Canterbury (+2.3%) and Southland (+2%).
Christchurch has seen values shoot up 2% annually to $800,000 – that’s just short of its Covid peak of $802,000.
Our stellar market of Queenstown-Lakes continues to deliver value growth. The OneRoof survey says it was up 0.5% in July, consolidating its $2 million-plus average value. It achieved an annual growth of 10.2% to the end of July.
Here are some tips for first-time buyers in the current market:
Unique opportunity – With more properties available in the lower to mid-value range, this is a great time to enter the market and secure a home while affordability is relatively high.
Time on your side – With every buyer segment showing a reluctance to transact, you’ll be able to take your time rather than be swept up in the frenzy of a property boom when the Fear of Missing Out (FOMO) dominates decision-making.
Long-term goals – Don’t judge a property on price alone. Think about the medium- to long-term financial value it will create. It’s essential you see your first property purchase as an opportunity to build personal wealth.
Do your research – Research recent sales and market trends in the specific area you’re interested in. As the latest OneRoof report illustrates, values can vary significantly by region and suburb.
Factor in all costs – Beyond the mortgage, be prepared for additional costs such as insurance, council rates, maintenance and the potential for unexpected repairs.
Build a strong team – Work with professionals you trust, including a mortgage adviser, a property manager (if you rentvest), a lawyer, and an accountant. Their expertise can help you navigate the complexities of the market.