Is this a good time to buy?

Auckland mortgage brokers weigh in

It’s no secret that the Auckland property market has slowed considerably in recent months. With sales volumes dropping, house prices showing little signs of growth and homes taking longer to sell, it’s little wonder that buyers are feeling hesitant about entering the market.

But is a soft market really a bad thing for buyers?

As one of the leading mortgage brokers in Auckland, we wanted to share our thoughts on the matter. In this article, we’re going to take a look at the current state of Auckland property and discuss whether now is a good time to buy in New Zealand’s largest real estate market.

Stable house prices

Auckland is no longer the capital gains mecca it once was. House prices have remained flat over the last few years, with figures from the Real Estate Institute of New Zealand (REINZ) showing the median house price in Auckland in June was $850,000 – unchanged from a year ago.

It’s a similar story when we look at the more affordable end of the market. The lower quartile selling price has fallen for three months in a row, declining from the record-equalling high of $680,000 in March to $670,500 in June. Although this is a relatively modest drop, it’s significant because it shows – contrary to what many experts predicted – that the lower end of the market is also softening.

While the sluggish growth won’t come as good news to investors, it does represent a good opportunity for first home buyers and other purchasers looking to take advantage of current market conditions.

Competitive interest rates

Home loan interest rates have fallen as the Reserve Bank of New Zealand continues to reduce the official cash rate (OCR). According to interest.co.nz’s Home Loan Affordability Report, the average two-year fixed mortgage rate offered by the major banks in June was just 3.87 percent – down from 3.95 percent in May and down from 4.46 percent a year earlier. That’s the lowest it’s been since interest.co.nz started keeping record in January 2002.

We may see interest rates drop even further in the months to come, with many economists predicting that we’ll see home loan interest rates of 3-3.25 percent if banks choose to pass OCR cuts onto borrowers.

Are you in the market for a low interest rate home loan? Contact your local Auckland mortgage brokers to find out how we can help.

Less competition

Figures show that there are fewer active buyers at the moment. In June, the number of houses sold in Auckland dropped 3.2 percent compared to a year ago, according to figures from the REINZ. This marks the lowest sales volume for the month of June since 2010. Across the rest of the country, sales dropped between 4 percent between June 2018 and June 2019.

While these figures might look a bit gloomy, a slow market can actually spell good news for buyers. Not only does it mean that you’ll face less competition on auction day, there’s also more motivation for sellers to negotiate on terms and prices.

In addition, there’s less pressure on you to make a quick decision, as there’s less chance of someone snapping up your potential new home while you’re viewing other properties or sorting out your paperwork.

Should you buy?

Whether or not this is a good time to buy in Auckland comes down to your unique goals and financial situation. For instance, if you’re looking for short-term capital gains, this may not be the best time to purchase, as the current state of the market suggests that property prices probably aren’t going to rise dramatically any time soon. Investors would be wise to be patient and see any purchase as a long-term hold.

However, a soft property market isn’t all bad news – particularly for first home buyers. A combination of attractive interest rates, low house prices and fewer active purchasers means that things are heavily skewed in favour of buyers. Those who take advantage of favourable market conditions may have the opportunity to purchase a larger or newer home than they would be able to in a buoyant market, or buy into an area that would otherwise be unattainable.

For more impartial advice from the best mortgage brokers in Auckland, feel free to give us a call today on 0800 536 337 or fill out our online enquiry form and we’ll be in touch with you shortly.

About iLender

At iLender we put your best interests first and not the Bank - our advice is impartial as all Lenders who we do business with pay about the same in commissions.

Although we are Auckland based Mortgage Brokers, we help customers everywhere in New Zealand and overseas with buying property in New Zealand, as we are very much about online and giving advice here and now!

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