Is it the Right Time to Buy?
Rising interest rates might have the market on edge, but there’s plenty of good news for property buyers says Nathan Miglani, Mortgage Adviser with Loan Market Paramount .
The market has certainly changed in recent months, on the back of policy changes in 2021 that made it harder to obtain finance and, in 2022, rising interest rates and inflation fears. There’s a lot of negative talk, but there is also positive news for those looking to purchase a property.
Over the past two years, we’ve seen a 30 per cent rise in property values. We’re not going to see those levels again in the next few years, but as for talk about a ‘price clip’, this doesn’t mean that prices will be going back to pre-Covid levels.
All of this news has definitely resulted in a market slowdown. Recent stats show first-home buyer activity, for instance, is now at its lowest level since 2017 across New Zealand. But I strongly believe that if you can meet the requirements of the banks, you should still buy a home.
It’s gone back to being a buyers’ market, with plenty of choice and less competition pushing up prices, and that makes it a good time to buy. Homeowners will have seen massive capital growth over the past few years, so should have accrued enough equity for a great deposit. First-home buyers will find more choice and less competition, particularly from the investors that they have been going head-to-head with in recent times.
Of course, a major concern right now is the possibility of interest rates rising too fast, leaving borrowers unable to service their mortgage. It is essential to consider the impact of interest rate rises, but we need to take a balanced view and remember that we have enjoyed record-low interest rates and we are returning to a more normal level.
When considering future serviceability, it’s important to make sure you fully understand the numbers. That’s where working with a good mortgage adviser is useful. They’ll help you get a clear picture of how costs can change and what that would mean for your budget.
Where we are still seeing lots of activity is in applications for new builds, which are exempt from LVR restrictions that came back into play last year. Here in Canterbury, Ashburton is showing extreme demand, followed by North Canterbury, especially Ravenswood, Amberley and Leeston. Methven is also drawing interest from investors, spurred on by the new Ōpuke Thermal Pools development and rents that have risen 10 per cent in the last two years.
And for those looking to get into the market for the first time, the East side here in Christchurch is still proving very affordable, with three-bedroom properties available under $550,000 – a bargain when compared to other New Zealand cities.
Know your financial position and make decisions that factor in future interest rate rises, but don’t let the negativity put you off buying.
With prices more realistic, it’s a good time to make a move.
We are in the final stages of setting up our new Loan Market Paramount head office in Burnside. We also have an office in Selwyn and we have recently expanded into North Canterbury, so if you would like to talk to a mortgage adviser about your plans, we can meet you wherever you are.
Years of experience mean Nathan Miglani knows how to give you the best possible chance of success if you are thinking of buying or building a property. Whether it’s a first home, next home, rental or a development, Nathan and his team are passionate about helping you through the process and they’ll find the best deal for your unique circumstances.
