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Most mortgage rates are lower this month compared to last month, with only the floating and six month rate unchanged. With some mortgage rates on offer now at levels not seen in 50 years, there is clearly some value to be had in fixing for short terms such as one year.
We do not expect the RBNZ to cut the OCR – but we acknowledge that it is a possibility. With OCR cuts ‘baked in’ to specials like the one year, it is debatable whether mortgage rates would fall much further even if the OCR did go lower. We therefore see value in the one year rate at the moment, but would avoid longer terms which will only be favourable ex-post if interest rates start to rise.
Speak with your Mortgage Broker or Financial Advisor to find out the best options for your situation.

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The group of eight leaders in the United States over the past week have not produced anything positive in relation to the European debt crisis.

The debate persists. Greece continues to spend other people’s money with no commitment to repayment. The continued inability of austerity measures being implemented will only prolong the inevitable within Greece’s economy with dramatic effects on the Euro and its stability.

Australia is facing declining growth and falling commodity prices which may lead to a cut in the Reserve Bank Australia’s interest rates to stimulate the economy. Most surveys of the US economy show a gradual economic growth scenario.

Western economies will continue to be challenged with high government debt ratio and high house hold debt for many more years and we will see periodic financial crisis which will hit business confidence and interest rate volatility, however this is the world we now live in.

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Investors and home owners remember the Reserve Bank (2004 -2007) moving the official cash rate from 4.5% to 8.25% however this is unlikely to be repeated. Most economic forecasters see the OCR remaining constant through the year and interest rates remaining low while the near future looks to deliver low inflation.

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Investors are now doing simple maths when comparing term deposits and the equity market, the chances of a share market decline and another mini crash being highly probable with the events in Europe and globally.
House prices are now rising. People are comparing the cost of borrowing with possible capital gain and the scope of good rental prices, continuing low interest rates, including fixed rates and finally the shortages of rental properties in some markets. These are all contributors to the increased activity of investors returning to their love of properties.

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It is now clear that the property market is more buoyant. We have evidence of a flood of young buyers entering the market, investors re-entering the property market and prices are rising. Those purchasers hoping to hang out for prices to fall have thrown in the towel and faced the growing evidence that the property market is on the move again, finally, after a long hard winter.
The unusually low interest rates, with fresh cuts in home lending fixed rates is fuelling the property market with confidence that these interest rates will be maintained for many months ahead. Investors are back to choosing property because the prospective returns are more positive in a world of volatility.
New listings began to surge in May at 11,544 up 16% on a seasonal adjustment (realestate.co.nz). This is the highest seasonally adjusted total month of listings since July 2010. The stock of unsold inventory rose in May to 35.7 weeks, whereas a year ago this was 43.2 weeks.
The asking prices also hit another high in May up to $435,887 as sellers have responded to the previous lack of demand; this has resulted in multiple offers on properties and peak sales particularly in Auckland and Christchurch.
The rise in stock has led to a fast adjustment of provincial regions where the market was biased to the seller; this appears to be more balanced.
The major regions showing movement in asking price expectations are Auckland 1.7% increase with a record asking price of $578,533 and Canterbury seasonally adjusted 0.5%
Confidence is creating the ensuing surge with sellers believing they can realise their asking price and buyers having the ability to find finance at achievable and sustainable levels.

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Confidence is returning to the housing market. The recent REINZ release of the March residential statistics shows a 25 per cent increase in the volume of sales, and a reduction in the number of days between listing to contract date.

Buyers are viewed to be more strongly motivated than sellers in all parts of Auckland and Christchurch. However, in Wellington and Northland it is the sellers who are more motivated. Prices are not perceived to be rising everywhere with weakness viewed in Waikato and Northland, and generally flat-price change perceptions evident in Hawkes Bay, Hamilton City, Otago and Manawatu-Wanganui.

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The recession in Spain and projections of rising unemployment in the Eurozone is resulting in wide spread marches involving thousands of protesters in 55 cities. Spain is the next country looking to require a bail out with a large fiscal deficit (8.5% GDP).

France and Greece are facing elections which may prove to be an opportunity for protesters to express their frustration within these countries.

Lessons from Europe need to be heeded on our side of the world. The New Zealand government needs to address austerity measures because it’s best to address your fiscal position before you’re up against the wall.

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New home buyers are entering the housing market, with the continued low interest rates currently available on bank loans; and (some) banks reducing the deposit levels required. A lack of rentals, particularly in Auckland, is also fuelling the return of First Home Buyers – those not wanting to continue tolerating the escalating rents.

First National offers free Home Buyers Guides for anyone who is going through the process of purchasing a home, proving a handy resource of information including property hunting, financing, making an offer, exchanging contracts and much more. To request your free copy, just visit our website and look under the resources tab for ‘Free Property Guides’.

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Auctions are becoming the preferred means of selling homes in many parts of the Auckland region. During the past month, more than three out of four transactions in some suburbs, were being decided by the auctioneer’s cry of “Sold to…”.
In total, REINZ data shows almost 30% of sales in the region during March were completed by auction compared to 22% 12 months ago and just 11% five years ago, near the peak of the housing market.

Speak to your local First National office to see if auction could be the right marketing tool for your property.

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As in the current positive real estate market, it is often difficult to determine accurate pricing. This is partly because recent sales of comparable properties may not be the best indicator of what buyers are prepared to pay.

Throughout New Zealand, multiple offers being presented on many properties is causing price increases. Some regions are seeing similar pricing to that which occurred in 2007.

It is important that you discuss with your Sales Agent the best method to sell your property in the current market.

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