Continuing our series on the current real estate market, Indian Weekender spoke to Gary Singh, one of the leading mortgage advisers, to get his insights on the 2023 market outlook.
Canterbury-based Singh is committed to assisting clients in realizing their goal of homeownership. With a network of leading banks and lenders, he can help first-time homebuyers as well as investors with finding the most appropriate solution.
Commenting on the interest rates, Singh says, “Mortgage rates in New Zealand are expected to increase in February 2023 but to stabilize and come down by the end of 2023 or early 2024. Historically, the average rates have ranged between 4 per cent and 5 per cent. The future of mortgage interest rates will be determined by various factors such as inflation, economic growth, monetary policy, and unpredictable events. Banks have already begun reducing their 4 and 5-year fixed-term interest rates. The decline in inflation and stability in the economy may bring the rates back to their normal levels."
Explaining the influence of consumer sentiment on the market, Singh says, “The state of the economy and inflation play a significant role in shaping the housing and mortgage sectors. A robust economy with high employment and consumer confidence often leads to heightened demand for housing, causing prices to rise and making it challenging for first-time homebuyers to enter the market. On the contrary, a weak economy may result in declining prices and an increase in foreclosures. Inflation can drive up interest rates, making it more costly for borrowers to obtain a mortgage loan, and reduce demand for housing. Ultimately, a stable economy with low inflation creates the best conditions for a thriving housing market and mortgage industry."
Singh says, “There are some really good buying opportunities for the first-home buyers. Under reserve bank exemption and Kainga Ora policy, customers can still buy owner-occupied properties with 5, 10, 15 per cent deposit. New build investment properties can be purchased with a 10% deposit. Another good option is Kainga Ora Partnership, where the loan can be lower of $200,000 or up to 25% of the purchase price (to assist buyers with deposit) subject to satisfying standard Kianga Ora eligibility criteria.”
Commenting on the regions in demand currently, Singh shares, “Christchurch in Canterbury region is in high demand as it has been undervalued and a lot of New Zealand population is migrating from North Island to Christchurch. Wellington and Auckland have a significant property price drop and the demand to purchase there is also stable. Overall home lending demand has fallen 27.4 per cent in the last 12 months as per Eqifax's latest report.”
Summing up the current market scenario, Singh says, “For existing borrowers, either first home buyers or investors who locked their interest rates at a lower rate of under 3 per cent range will be renewed to a higher rate over 6.5 per cent, which will increase the mortgage repayments significantly. The borrowing for new borrowers would be low due to high rates which will drop the demand,”
“I can say it is a fair market currently as it is a buyer's market and median prices have fallen. There are also a lot of property options to choose from, and lower prices are great for those who have recently got residency and are looking to buy their first home.”
The above is not financial advise. Please consult your financial advisor before making any decision.
Singh can be contacted at gary.singh@vegalend.co.nz
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