It’s no secret that the property market, and the mortgage market are intimately linked. Today that is truer than ever, to the point where the government is likely to impose mortgage criteria and restrictions to control the burgeoning property sector.
But what is the Auckland property market doing?
In Auckland and Christchurch (where most of the demand is coming from) there has been a widespread drop in house prices in the last month.
Partially responsible for this is that Auckland house price inflation rates have been dropping over the last few months. In June this house price inflation was at a record high at over 20%, but now lies at 13.9% after dropping 4.4% in last month, according to the latest REINZ figures. However the accuracy of this data is disputed by ASB analyst Jane Turner, who gives the three month average (arguably more comprehensive figure) at 16%.
Additionally, property listings have been on the rise- providing a much needed refreshment to the market, which had been limited in previous months due to a lack of supply according to Jane Turner. These new properties may be somewhat account for the rise in property sales to 6777 – a 10.5% increase in the last month alone, and a 14.7% rise compared to July last year.
What can we expect for the next few months?
At the moment, there is a lot of contradicting speculation and not a lot of certainty due to the sheer scope of factors involved, including:
- Supply to the market. Traditionally July is a fairly quiet month in the market, and while that isn’t the case this year, there has still been a supply shortage. If the market has its usual upturn in spring there may be serious shortages and constraints based on a lack of supply in urban areas- particularly Auckland and Christchurch.
- If and or when the government imposes the LVR mortgage restrictions. When it does so, there will be a decline in the market, although the recently released provisions for first home-buyers should prevent this being too-drastic. Considering the Reserve Bank will only give two weeks notice before these policies come in too effect, this change could come rather rapidly.
The bottom line
If you are looking at selling your property now is the prime time, however if you are looking for a replacement in an urban area it may be difficult- and require further financial investment.
Breaking in to the market currently isn’t ideal, however there is no sign of respite so it may be even worse in the future. It may be a good idea to get in before the new LVR policies apply if possible, however you may have to act quickly as the public will be given no more than two weeks warning before the policies are implemented.
If you intend to enter the market afterward it may be worth sitting down with a mortgage broker to work out what schemes you qualify for, and what the best options available to you are.
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