NZ’s property market is currently enjoying a mini revival in values. Our annual national growth rate increased in April to 7.6%, which is actually the strongest rate of growth since the previous high of 8.1%, back in June last year.
The national average property value now stands at $678,856: an increase in the last 12 months of over $47,700.
This means the deposit requirement for an ‘average’ NZ property has increased by $9,540 in the last year. We’ve heard about the fear of missing out (FOMO), but this actually illustrates the cost of missing out (COMO!). If you don’t earn almost ten grand more today than you did a year ago, things are harder.
Feeling smug in your existing property ownership status? Read on.
The continued growth in property values is being assisted by low mortgage interest rates. Fixed mortgage rates are generally flat (even dropping slightly in recent weeks) and with the OCR set to remain on hold until late 2019, the lending environment looks stable for the foreseeable future.
Head of Research, Nick Goodall explains the current situation “Such a stable mortgage rate backdrop will reassure the 90% of NZ borrowers (on a floating rate or have their fixed rate review due) who are exposed to any rate rises over the next two years”.
Banks are testing borrowers on their ability to service mortgages at much higher rates than what the current interest rates are, and the ‘best borrowers’ (generally those tested by the banks as able to meet their repayments at a mortgage rate of at least 7%) are enjoying strong competition from the banks for their ‘business’.
On top of relatively stable lending conditions here, concerns of higher offshore financing costs have been dissipating, which means the outlook for mortgage interest rates remains low.